Mar'25 View on Tata Steel Ltd

Tata Steel Ltd is Asia's first integrated private steel company setup in 1907. The company has presence across the entire value chain of steel manufacturing from mining and processing iron ore and coal to producing and distributing finished products. The company has a target to increase domestic steelmaking capacity to 30 MnTPA by 2025. • TATA’s Q3FY25 adjusted operating EBITDA was largely in line with our estimates, with weak margins across India and Europe. • Management commentary suggested that steel prices will remain under pressure, while lower raw material costs should aid margins. • Losses in Europe are likely to continue, and decarbonization capex should keep dragging cash flows. • Regional price pressure should keep domestic margins rangebound unless the government imposes tariff barriers against imports. • Stock is currently trading at valuation of 5.7x EV/ EBITDA FY27E. • We trim our earnings and revise Fair Value to Rs120. • Tata Steel Europe reported an EBITDA loss of ~US$42/ton in Q3FY25.