Axis Securities has reaffirmed its BUY recommendation for Tata Steel, setting a 12-month target price of Rs 195 per share. The research house underscores a robust growth strategy, driven by strategic expansions and acquisitions that position Tata Steel for sustained outperformance in the Indian steel sector. Investors are advised to capitalize on the current undervaluation, with the stock trading at Rs 166 as of December 11, 2025, implying a potential upside of 17%. The report highlights Tata Steel’s aggressive moves to secure raw material supply, enhance downstream capabilities, and pursue low-carbon technologies, all of which are expected to bolster profitability and market share over the next several years.

Axis Securities Maintains BUY Call

Axis Securities continues to rate Tata Steel as a BUY, with a revised target price of Rs 195 per share. The recommendation is based on the company’s strategic expansion plans, including major capex projects and asset acquisitions that are poised to drive earnings growth and margin expansion. The current market price of Rs 166 offers a compelling entry point, with an expected upside of 17% over the next 12 months. Axis Securities’ valuation model assigns a forward 1-year EV/EBITDA multiple of 7.5x to Tata Steel’s India operations, 5.0x to other operations, and 4.0x to Europe, resulting in the Rs 195 target.

Strategic Expansion in Long Products

Tata Steel has received in-principle board approval for a 4.8 MTPA expansion at Neelachal Ispat Nigam Ltd (NINL), scaling its long-products capacity from 1.1 to 5.9 MTPA. This move is expected to materially enhance Tata Steel’s long-products franchise, leveraging captive ore, downstream service centers, and the Tata Tiscon retail network. The expansion is projected to take 3-4 years post-final approval, with environmental clearance anticipated within 3-4 weeks. The new configuration will focus on premium products such as rebars-in-coils, alloy wire rods, and tire cord, targeting margin-accretive segments rather than commodity-grade longs.

Acquisition of Pellet Plant and Synergies

Tata Steel has executed definitive agreements to acquire a 50.01% stake in Thriveni Pellets Private Limited (TPPL), which owns the 4 MTPA Brahmani River Pellet Limited (BRPL) pellet plant and a 212 km slurry pipeline. The acquisition is valued at up to Rs 636 crore, with monthly opex savings estimated at Rs 50-60 crore, implying a payback period of just 12 months post-completion. The asset fits seamlessly into the Kalinganagar-NINL corridor, ensuring pellet supply security and lowering logistics costs. Tata Steel highlighted the replacement cost advantage, pipeline value, and operational synergies as key drivers of the deal.

Downstream Enhancements and Import Substitution

The board has approved the setup of a 0.7 MTPA Hot Rolled Pickling and Galvanizing Line (HRPGL) at Tarapur, Maharashtra, targeting high-end automotive, appliance, and construction segments. This project is expected to commission quickly due to its downstream nature and will enable import substitution and raise the value-added product (VAP) mix. The expansion complements ongoing downstream initiatives across tinplate, long-products service centers, and the BlueScope JV acquisition, critical for margin expansion and offsetting cyclicality in commodity HRC.

Low-Carbon Technology and Hisarna Demonstration

Tata Steel will scale its Hisarna pilot technology into a 1 MTPA demonstration plant in Jamshedpur, estimated to cost Rs 2,000-3,000 crore. Hisarna enables ironmaking without coke ovens, sinter plants, or pellet plants, using lower-grade ore and non-coking coals, and emits 20% less CO2 versus blast furnaces. Tata Steel views Hisarna as a long-term strategic hedge on carbon costs, energy transition policy, and ore/coke volatility, with steady-state hot-metal costs potentially Rs 3,000/tonne lower than BF routes.

Financial Outlook and Valuation Metrics

The following table summarizes Tata Steel’s key financials and valuation metrics as projected by Axis Securities:

Investor Targets and Risk Factors

Axis Securities’ BUY recommendation is predicated on Tata Steel’s robust expansion pipeline, strong retail franchise, and strategic positioning in the Indian steel market. The target price of Rs 195 implies a 17% upside from the current market price. Key risks include potential declines in HRC prices due to global trends, higher coking coal costs, and evolving policy risks around iron ore auctions post-2030. Investors should monitor these factors closely, but the overall outlook remains positive for Tata Steel’s long-term growth trajectory.