Tata Steel’s Q4FY25 results signaled resilience amid macroeconomic flux, with ICICI Securities reaffirming its BUY rating and hiking the 12-month target price to Rs 190 (from Rs 180), indicating a 28% upside from current levels. The steelmaker delivered an EBITDA beat in Q4, underpinned by operating leverage, continued ramp-up in domestic operations, and aggressive cost optimization. The research house lauds Tata Steel’s execution on fixed cost takeouts and forecasts a 47% YoY increase in FY26 EBITDA, driven by domestic and UK operations. While global steel dynamics remain volatile, the company’s deleveraging and capacity expansion lend confidence to medium-term value creation.

Q4FY25 Performance in Line, Strategic Cost Management in Focus

Tata Steel’s consolidated EBITDA came in at Rs 65.6 billion, in line with expectations, registering an 11% sequential increase. Key drivers included:

A 3.3% YoY growth in standalone sales volumes to 5.6 million tonnes, primarily due to continued ramp-up at Kalinganagar Phase-II.

EBITDA per tonne for standalone operations improved by Rs 1,000 QoQ to Rs 12,463, fueled by a Rs 600/te realisation uplift.

At the international level, Tata Steel Netherlands (TSN) swung to profitability (EBITDA of Rs 1.2 billion), while Tata Steel UK (TSUK) reduced fixed costs by GBP 230 million YoY.

Management highlighted that Rs 66 billion in structural cost takeouts were achieved in FY25, with a target of Rs 115 billion in FY26, broken down as:

Rs 40 billion in India

Rs 30 billion in TSUK

Rs 45 billion in TSN

Operational Efficiency Enables Margin Expansion

EBITDA margin for FY25 expanded to 11.6% from 9.7% YoY, with operating cash flows increasing 37% YoY to Rs 235 billion. Debt reduction stood at Rs 62 billion over the last six months, driven largely by a Rs 43 billion working capital release in Q4.

Capex for FY25 was Rs 157 billion, with FY26 guidance at Rs 150 billion—aimed at completing major domestic and international projects, including:

KPO-II ramp-up

Ludhiana electric arc furnace (EAF)

Combi mill at TSG

Expansion at Neelachal Ispat Nigam Ltd (NINL)

Earnings Visibility Enhanced by Realisation Gains and Cost Tailwinds

ICICI Securities anticipates Tata Steel’s FY26 EBITDA to rise 47% YoY to Rs 371.8 billion, primarily driven by:

Realisation gains of Rs 3,000/te QoQ in Q1FY26 in domestic markets.

Lower coking coal costs, down USD 10/te, benefiting both Indian and European operations.

FY26/27 standalone EBITDA/te projections raised to Rs 15,800 and Rs 16,775, respectively.

Segment Performance Highlights from Q4FY25

India Operations:

Delivered 20.9mt in FY25, excluding KPO-II; most plants operating at 100% utilisation.

Tata TISCON sales rose 19% YoY to 2.5mt, while Astrum and Steelium combined sales were 3.8mt.

Branded and retail segments delivered 7mt in sales, signaling robust end-user demand.

Neelachal Ispat Nigam Ltd (NINL):

EBITDA for FY25 stood at Rs 10 billion, with a 23% margin in Q4.

Operating cash flow was resilient at Rs 10 billion in a challenging environment.

TSUK and TSN:

TSUK: Despite ongoing EBITDA losses (GBP 80/te in Q4), fixed cost was down GBP 69/te. Break-even expected by Q2FY26.

TSN: Delivered an EBITDA swing of EUR 500 million YoY; cost reduction of EUR 500 million targeted through productivity and repair cost savings.

Financial Forecast and Valuation Revisions

ICICI Securities marginally revised its earnings estimates to reflect partial inclusion of cost benefits:

FY26 EBITDA upgraded by 1.3% to Rs 371.8 billion

FY27 EBITDA raised 3.5% to Rs 423.4 billion

FY26 PAT forecasted at Rs 113.8 billion, up 272.7% YoY

Valuation at 6.8x FY27E EV/EBITDA, translating to a revised target price of Rs 190

Key Financial Summary

Valuation and Stock Levels

At a current market price (CMP) of Rs 149, ICICI’s revised target of Rs 190 implies a 28% upside. Key technical and valuation takeaways:

Support levels: Rs 140

Resistance zones: Rs 158, Rs 170

Long-term target: Rs 190

Buy Zone: Rs 145–149 for medium-term investors

Risks and Watch Points

Despite the positive outlook, certain risks merit caution:

Delay in TSUK’s transition to profitability could dampen consolidated margin gains.

Higher-than-expected restructuring costs in the UK.

Slower-than-anticipated domestic demand recovery amid macro tightening.

Regulatory headwinds such as CBAM (Carbon Border Adjustment Mechanism) in Europe.

Reinforced Conviction Amid Execution Strength

ICICI Securities’ BUY call on Tata Steel is underpinned by tangible gains in operational cost metrics, steady deleveraging, and value-accretive capex in India and Europe. With FY26 shaping up as an inflection year on the back of execution-heavy cost strategy and realization tailwinds, investors are likely to find substantial upside in the stock. Tata Steel’s sharp focus on EBITDA per tonne improvements, working capital discipline, and product mix shift positions it for robust outperformance over the medium term—provided global steel pricing stabilizes.