Tata Steel: PL Capital ups target on Tata stock post management meet, says this

PL Capital has maintained an ‘Accumulate’ rating on Tata Steel with a revised target price of Rs 181 from Rs 177 earlier. The domestic brokerage met Tata Steel’s management to understand the company’s expansion roadmap and the current demand environment. The Tata Steel management reaffirmed its target to reach 40 million tonnes per annum (mtpa) capacity over the next five years. The Kalinganagar Phase-II (KPO-II) ramp-up is on schedule, with the CRM and finishing lines set for commissioning in Q2FY26, adding volumes over the next two years.

Environmental clearance (EC) for NINL’s 9.5 mtpa expansion is in advanced stages, with board approval expected once obtained. Additionally, PL Capital said, a 0.75 mtpa electric arc furnace (EAF) at Ludhiana is on track for Q4FY26, with two more EAF projects planned once Ludhiana proves operational. The KPO site also has enough land to add 8 mtpa in phases.

PL Capital expects Tata Steel may face capacity constraints post FY28 if execution speed does not improve, particularly amid robust domestic demand.

The safeguard duty provides a floor for domestic steel pricing, presenting upside potential for EBITDA per tonne. Risks include demand uncertainty in developed markets and continued Chinese steel supply.

PL Capital said domestic demand is expected to strengthen, supported by GST rationalization and growth in auto and engineering sectors, while government infrastructure spending will drive demand for long products. Tata is fast-tracking NINL’s expansion to capture this opportunity.

Globally, subdued demand persists, influenced by US tariffs. Chinese exports remain high, but the recently announced anti-involution policy could support prices. In India, the safeguard duty—around 12 per cent—is expected to protect domestic prices over the next three years.