Tata Steel vs Vedanta: Price targets, outlook, financials and more 

Tata Steel and Vedanta-the heavyweights on the metal indices on NSE and BSE are often on radar of traders and investors on the Dalal Street for their stable returns and healthy financials. Tata Steel shares are creating a buzz after the Tata Group giant reported its earnings on May 12. The metal stock has delivered multibagger returns of 478% and 350% in five years and 10 years.  The stock generated positive returns in both long term and short term, rising 13% this year and gaining 46% in two years. 

In terms of financials, Tata Steel has a PE of 56.68. Returns on assets came at 1.22% in the last fiscal against -1.62% in FY24. However, debt to equity ratio slightly rose to 0.98 in the last fiscal, signalling the company's growth plans in the near future. In FY24, debt to equity ratio of Tata Steel stood at 0.89. 

Ideally, debt to equity ratio is considered high if it is above 1.5. The comfortable range for the ratio is 1 to 1.5.  

In terms of return on capital employed, the ratio stood at 8.49 in FY25, slightly higher than 8.13 in FY24. 

The net profit margin for last fiscal climbed to 1.36 against -2.11 in FY24. 

Shares of Vedanta have generated positive returns in the short and long term. The metal stock has clocked multibagger returns of 375% and 110% in five years and 10 years.  It has risen 7% in three months and gained 60% in two years. 

In terms of financials, Vedanta has a PE ratio of 11.55. Returns on assets came at 11.20% in the last fiscal against 4.40% in FY24. However, debt to equity ratio slightly fell to 0.57 in the last fiscal. In FY24, debt to equity ratio of Vedanta stood at 0.64. 

Ideally, debt to equity ratio is considered high if it is above 1.5. The comfortable range for the ratio is 1 to 1.5.  

In terms of return on capital employed, the ratio stood at 8.49 in FY25, slightly higher than 8.13 in FY24. 

The net profit margin in the last fiscal climbed to 24.13 against 9.36 in FY24. 

Q4 earnings and price targets

Both firms reported a decent set of earnings in the March 2025 quarter. 

Tata Steel clocked a 117 percent rise in its consolidated profit at Rs 1,200.88 crore in Q4 compared to Rs 554.56 crore in the same period of the previous financial year. The profit stood at Rs 295.49 crore in the third quarter of FY25. The company’s consolidated revenue slipped 4.2 percent to Rs 56,218.11 crore in the reported quarter compared to Rs 58,687.31 crore in the year-ago period. 

Emkay Global said that Tata Steel's management is anticipating a growth in volume of 1.5 million tonnes for FY26, primarily fueled by demand in India. The brokerage has maintained its 'buy' recommendation for the stock, with a target price remaining steady at Rs 185.

Nuvama Institutional Equities raised its stance to 'buy', setting a new target price of Rs 177 per share, up from the previous Rs 164. The management has projected a rise in steel realization by Rs 3,000 per tonne quarter-on-quarter, alongside a drop in coking coal costs of $10 per tonne, which is expected to enhance EBITDA per tonne for Q1FY26.

"We anticipate that the EBITDA per tonne for Q1FY26 will increase by approximately Rs 2,000 quarter-on-quarter due to elevated prices and lower coal costs, although this could be slightly counterbalanced by softer volumes. Additionally, we expect Europe to start contributing positively to EBITDA in Q1FY26, thanks to improved profitability in the Netherlands and breaking even in the UK," Nuvama noted.

Conversely, Motilal Oswal has reiterated its 'neutral' rating and lowered its target price to Rs 155 per share. "While there are short-term hurdles linked to price fluctuations amid trade tensions, the long-term prospects for Tata Steel remain robust. The Indian division is likely to sustain its impressive performance, and an improvement in the European business will bolster overall earnings."

Vedanta reported a 118 per cent year-on-year (YoY) rise in net profit to Rs 4,961 crore for the March quarter, led by a 13.9 per cent YoY increase in sales to Rs 40,455 crore. EBITDA climbed 30.8 per cent to Rs 11,466 crore, with the EBITDA margin expanding 365 basis points to 28.34 per cent. 

MOFSL noted that Vedanta's performance in the March quarter aligned well across its segments, indicating that capital expenditure plans are advancing effectively, which should contribute to further cost efficiencies.

"The management aims to sustain robust earnings growth, driven by forthcoming capacity that will boost the production of value-added products. Vedanta remains committed to its deleveraging strategy, and as cash flows increase, this will bolster both its expansion and deleveraging initiatives. At present, the stock trades at 4.9 times FY27 EV/Ebitda," MOFSL highlighted.

The brokerage made slight reductions to its FY27 estimates and assigned a 'Neutral' rating for the stock, setting a target price of Rs 470.

Emkay Global has lowered its earnings estimates by 5 percent for FY26-27, while maintaining a 'Buy' rating, though it has revised its target price down by 4.5 percent to Rs 525 from Rs 550.

Nuvama continues to endorse its 'Buy' recommendation for Vedanta, predicting continued profitability in the aluminium sector. This domestic brokerage believes that while aluminium prices may decline, this will be counterbalanced by a fall in alumina costs. They also expect Vedanta to declare a dividend of Rs 30 per share in both FY26 and FY27, proposing a target price of Rs 607 per share.

Nuvama indicates that by FY26, all planned expansions, excluding coal mines, could be completed. Based on this, they forecast an EBITDA compound annual growth rate (CAGR) of 20 percent for Vedanta from FY25 to FY27, estimating it will reach Rs 60,500 crore, driven by increased production volumes and lowered costs. The aluminium segment is anticipated to be the main growth driver, with an expected CAGR of 25 percent during the same timeframe.