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Informist, Monday, May 18, 2026

By Anshul Choudhary

MUMBAI – Most brokerages have retained their buy recommendation for the shares of Tata Steel Ltd. on expectations that higher sales volumes in India and better steel prices across Europe will offset the disruption in the Netherlands operations, where coke and gas plants are facing risk of early closure. These brokerages raised earnings estimates for Tata Steel shares after strong earnings for the March quarter, which bolstered the view of higher volumes and steel realisations ahead.

Out of 13 brokerages which published a note after Tata Steel's earnings were announced, eight have buy or equivalent recommendations for the stock with the average target price at nearly INR 246, indicating a rise of 22% from Monday's close. Four brokerages recommended to hold the stock with average target price at INR 214. Brokerage Citi advised to sell the stock with target price at INR 200. Tata Steel announced its results for the March quarter on Friday.

Brokerages expect volume growth for the company to come largely from its operations in India as Europe operations face issues such as delay in commissioning of electric arc furnace at Port Talbot and early shutdown of the Netherlands' coke and gas units. "...the recent ramp-up of Kalinganagar and the commissioning of a 0.75mt EAF (electric arc furnace) plant at Ludhiana are expected to drive volume growth at an 8% CAGR over FY26-28E," ICICI Securities said in a report.

Tata Steel reported sales volume of 22.5 million tonnes for FY26 and guided for sales volume to increase by 2 million tonne in FY27. Tata Steel want to further increase sales volume with capacity expansion of 4.8 million tonne per annum planned at Neelachal Ispat Nigam Ltd., which is expected to complete by FY30, and capacity expansion of 2.5 mtpa in Odisha, which is likely to complete by FY29.

Most brokerages expect steel prices in Europe to rise after the UK government announced safeguard measure which includes raising import tariffs to 50% from 25% earlier and 60% reduction in tariff-free import quotas. It will aid prices and benefit companies, such as Tata Steel, which manufactures steel in the UK, brokerages said.

Better steel prices in the UK will help Tata Steel UK turn EBITDA positive in FY27, brokerages said. Tata Steel UK reported an EBITDA loss of INR 6.24 billion in the March quarter. EBITDA refers to earnings before interest, taxes, depreciation, and amortisation.

The safeguard measures in the UK will be effective from July and the UK business may keep making losses untill prices improve materially, analysts said. This could be a problem in the near term for Tata Steel's Europe business as the Netherlands business is already facing risks of higher costs if coke and gas units are shut. "Europe operations may slip into losses in Q1 due to lower profits from Netherlands," Nuvama Wealth Management said in a report, while recommending to hold the stock.

The Netherlands' business may take a hit in the coming quarters as its coke and gas units are facing early closure due to failure to meet emission norms. If shut, it would force the company to buy coke from other companies which will come at a higher cost and hit margins.

This has irked some analysts with Citi even recommending to sell the stock. Among domestic brokerages, Systematix Shares and Stocks downgraded its recommendation to 'hold' from 'buy' and cut target price by nearly 13% to INR 201.

"...sustained TSN (Tata Steel Netherlands) overhang is likely to cap near term rerating potential," Systematix said in its report. "We cut our FY27E/FY28E EBITDA estimates by 22%/19% to factor in materially weaker outlook for TSN amid escalating regulatory uncertainty, potential coke and gas plant (CGP) closures, and resulting operational disruptions," Systematix said in its report.

Concerns around the Netherlands operations likely affected investor sentiment on Monday with shares of Tata Steel closing nearly 3% lower at INR 209.71 on the National Stock Exchange compared with Friday. Tata Steel mentioned about the risk of early closure of coke and gas units in Netherlands on Friday along with its quarterly earnings. 

However, most brokerages have a bullish view in the long run for Tata Steel and they do not expect material impact from potential closure of the plants in the Netherlands. "Netherlands EBITDA expected to remain positive even under a coke oven closure scenario, with lower carbon costs to partially offset higher procurement costs," JM Financial Institutional Equities said in a report.  End

Edited by Akul Nishant Akhoury

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