ICICI Securities has reaffirmed a BUY rating for Tata Steel, emphasizing the company’s poised recovery and capacity-driven growth, with a fresh target price of Rs 210 per share and a 12-month perspective. The November 2025 research highlights robust Q2FY26 results, strategic expansions, and ongoing transformation in its Indian and European operations. Despite near-term margin pressures, the outlook remains bullish on the back of brownfield expansion, impactful cost-rationalization, and anticipated recovery in both domestic and European markets. During 2025, Tata Steel witnessed selling pressure during the first few months but a quick recovery was witnessed as the steel prices in the international markets firmed up. Tata Steel remains a strong stock for long term investors and any declines should be seen as an opportunity to accumulate the steel major.

Quick Review: Tata Steel's Upward Trajectory Backed by Strategic Expansion

ICICI Securities’ latest research reiterates its BUY call for Tata Steel , following an impressive Q2FY26 performance and concrete evidence of robust growth levers for the future. The report details the company's drive to leverage India's growing infrastructure demands, the ongoing revamp of its European operations, and a firm grip on cost optimization, setting the groundwork for margin expansion and value creation. While some headwinds—particularly in the UK—persist, the report’s tone remains broadly optimistic, pinning a target of Rs 210 per share for investors eyeing a 20% upside from current levels.

Solid Q2FY26 Results Reinforce Growth Story

Tata Steel’s consolidated topline surged to Rs 58,689 crore—up 9% year-on-year—fuelled by a 5% rise in steel sales to 7.9 million tonnes. EBITDA stood tall at Rs 8,897 crore, marking a dramatic boost in operating margins to 15%, up 120 basis points sequentially. Notably, Indian operations led the charge, with volumes scaling 5.6 million tonnes, registering a staggering 17% jump quarter-on-quarter, even as price realization slipped due to market softness. Profit after minority interest spiked 49% quarter-on-quarter, reaching Rs 3,102 crore, testifying to Tata Steel’s operational resilience and savvy cost-side management.

Indian Capacity Expansions Pave the Way

The company’s capacity narrative stands out: Tata Steel’s brownfield expansions have bumped up India’s crude steel output to a formidable 26.6 million tonnes. Ambitions are far from capped; the race is on for a 40 million-tonne capacity by 2030. Kalinganagar’s Phase-2 ramp-up is done, and the Meeramandli, Neelachal, and Ludhiana assets are next in line, together expected to drive a remarkable 6% CAGR in Indian volumes over FY25–FY27, peaking at an estimated 23.4 million tonnes in FY27. Backed by government policies aiming for 300 MT national steel capacity, Tata Steel is betting big on India’s infrastructure moment.

European Turnaround: EAF and Decarbonization

Europe remains challenging. Tata Steel’s ongoing Electric Arc Furnace (EAF) transformation in the UK—underpinned by a £500 million UK government grant—and a strategic Direct Reduced Iron (DRI) EAF overhaul in the Netherlands (with Dutch government backing up to €2 billion) underscore the company’s pivot toward agile, green steelmaking. Although the U.K. unit is expected to remain loss-making for the year, these investments are primed to deliver a sustainable uplift in profitability post-FY27, contingent on improved EU steel pricing and cost efficiencies.

Cost Leadership and Margin Protection Strategies

A centerpiece of Tata Steel’s playbook is its region-wide cost transformation agenda, targeting a whopping Rs 11,500 crore in savings through FY26, with more than Rs 5,450 crore netted already in the first half of the fiscal. Indian EBITDA/tonne remains resilient (Rs 15,200 in Q2), but the company braces for potential Q3 margin squeezes from softer domestic prices and rising coking coal costs. Nevertheless, ongoing operational pruning—such as inventory management, raw material efficiencies, and focused capital expenditure—is projected to keep the consolidated EBITDA trajectory upwards, with a forecasted 27% CAGR from FY25–FY27.

Strategic Initiatives: Downstream Integration and Portfolio Rebalancing

Expanding its strategic horizon, Tata Steel is set to acquire the remaining stake in Tata BlueScope, catalyzing downstream synergies and market reach. Concurrently, the proposed divestment of the Jajpur ferroalloys plant and the withdrawal from the Sukinda mine are recalibrating the portfolio for alignment with internal consumption requirements. These moves reinforce Tata Steel’s nimble adjustment to shifting global steel and raw material trends.

Financial Snapshot and Shareholding Dynamics

Recent quarters have revealed improving leverage dynamics: net debt stands at Rs 87,040 crore, with a Net Debt/EBITDA ratio of 3x as of September 2025. Promoters maintain a 33.2% stake, and notable shifts have occurred to institutional holding patterns—FIIs at 17.3% and DIIs increasing their share to 26.9%. The capital structure conveys robust backing and confidence, providing a buffer for ambitious capex.

Key Financials and Valuation

Below is a concise snapshot of Tata Steel’s recent and projected performance:

Valuation, Target and Upside Potential

Employing an SOTP-based valuation (8.5x EV/EBITDA for Indian business and 4x for Europe on FY27E estimates), the target price is Rs 210 per share, offering a forward 20% upside from the current price of Rs 175. The rating rationale is rooted in expected volume-led growth, firm cost credibility, and policy tailwinds (such as safeguard duties and EU import control measures) poised to support steel pricing both domestically and abroad.

Risks: Price Headwinds and Execution Hurdles

Key risks shadowing the stock include a protracted steel price recovery, which could weigh on margin accretion, especially in Europe, and potential cost overruns in the UK’s EAF transformation program. Executional hiccups in expansion projects or regulatory headwinds might also impede the promising trajectory.

Guidance and Levels to Watch for Investors

- Investors are advised to monitor Tata Steel at technical support at Rs 170–175. Breakdowns below these levels might suggest short-term caution. - The upside target remains firmly at Rs 210 per share. - Resistance is likely between Rs 200 and Rs 210; a breach above Rs 210 will confirm momentum for longer-term re-rating. - For a strategic position, accumulation on declines closer to Rs 175 is favored, the upside potential reinforced by strong growth visibility and capital discipline.
Tata Steel stands at an inflection, balancing capacity-led aggression with sharp cost focus and a resolute pivot to sustainability. The buy call underscores confidence in its structural earnings revival and robust fundamentals that lend the steel behemoth enduring appeal for discerning investors.