Tata Steel: Europe breakeven, steel prices bottomed out; here are target prices

Tata Steel delivered a decent set of June quarter results, supported largely by improved Ebitda from its European operations. The Indian business delivered an in-line performance, with strong net sales realisation (NSR) offsetting the impact of subdued volume growth due to maintenance shutdowns at the NINL and Jamshedpur facilities. Analysts believe domestic steel prices may have bottomed out and, for now, maintain a ‘neutral’ to ‘buy’ rating on the stock. The stock, which is up 15 per cent in 2025 so far, but down 4 per cent in the past one year, has over 54 lakh small individual investors as of June 30.  

Emkay Global said Tata Steel delivered a modest Q1 beat and achieved breakeven in Europe operations, but the finer details and takeaways appear underwhelming. 

Cost takeout was a key focus area in Q1 results, with the company reporting operational efficiencies at Rs 2,900 crore. Emkay said the target of achieving efficiencies of Rs 11,500 crore over 12-18 months seems aspirational. 

"In addition, UK breakeven remains out of sight. The guidance for Q2FY26 understandably factors in the impact of current sluggish demand. That said, we are seeing signs of demand and prices being close to bottoming out; notably, domestic steel prices are at a steep discount to import parity which would eventually adjust upward, in our view, clearing the way for a rebound in H2 for Tata Steel earnings," Emkay said. 
This brokerage retained 'Buy', with an unchanged target price of Rs 185. 

MOFSL said the Ebitda improvement in Europe operations is expected to continue steadily in the coming quarters on account of its cost-restructuring measures. The capacity ramp-up in the Netherlands and lower fixed costs should also support the overall Ebitda performance going forward, it said.

While acknowledging near-term uncertainties related to price volatility due to trade tension and recent correction in steel prices, MOFSL said the long-term outlook remains strong for Tata Steel. 

"We largely maintain our FY26/FY27 estimates, owing to decent performance during the quarter. At CMP, Tata Steel is trading at 7 times FY27 EV/Ebitda and 2.1x FY27E P/B. We reiterate our Neutral rating with a revised SOTP-based target price of Rs 165 per share," it said. 

Nuvama said despite a likely weak Q2FY26 amid Rs 2,000 per tonne QoQ lower steel prices, its FY26 earnings stay unchanged, as it believes domestic steel prices have bottomed out and are likely to rise with end of monsoon. 

"Next phase of expansion at NINL (from 1mtpa to 4.5mtpa) should be announced in H2FY27. Europe shall continue to post positive Ebitda driven by cost control measures, but the UK operation shall breakeven by FY26-end. Overall, we expect a consolidated EBITDA CAGR of 32 per cent over FY25–27E," it said whole raising its target price on Tata Steel to Rs 180 from Rs 177 earlier.