Tata Steel shares: Why Anand Rathi upgraded this Tata group stock to buy? Target price

Anand Rathi has in its latest note has upgraded Tata Steel Ltd stock to 'Buy', citing improving realisations, ongoing cost takeout initiatives and hopes the UK operations may breakeven in FY27. The brokerage suggested a target of Rs 240 on the stock, as it raised its FY26, FY27 and FY28 Ebitda estimates by 3.1 per cent, 7.6 per cent and 5.6 per cent, respectively. 

Anand Rathi said the implementation of the Carbon Border Adjustment Mechanism (CBAM) in January has coincided with a sustained uptrend in EU steel prices, with spot prices improving $100 per tonne over the past three months, benefiting incumbents such as Tata Steel. 

Further, it said, the UK government’s move to realign its steel import quota regime mirroring EU policy marks a structural positive. 

"As tighter quotas take effect from July 2026, we expect a meaningful reduction in import pressure, enabling a more level playing field for TATA EU. Consequently, we now factor in UK EBITDA breakeven by H2 FY27, a key inflection for consolidated profitability. On the domestic front, steel realizations have rebounded sharply, with Q4 average HRC/primary rebar prices up 14.8 per cent/ 20.7 per cent  QoQ to Rs 54,165/Rs 56,938 per tonne," Anand Rathi said.

The brokerage believes the magnitude of price improvement is trending ahead of management’s earlier guidance, supporting Q4 standalone Ebitda per tonne of over Rs 15,000 — implying a stronger exit run-rate into FY27. Operationally, the brokerage said, the Tata group firm continued to strengthen its India footprint with commissioning of 0.75 million tonnes EAF facility at Ludhiana, taking domestic capacity to 27.35 million tonnes. 

"While legacy packaging contracts in the Netherlands may cap near-term ASP expansion, this is likely to be transient. The combination of firm EU pricing, domestic strength, an improving product mix and expected price hikes in automotive contracts from Apr’26 is expected drive margin expansion," it said.

On Wednesday, the stock settled 1.25 per cent higher at Rs 194.20.