Tata Steel bulls expect stock to test ₹224 levels, but bears cite rising debt

Shares of Tata Steel Ltd. are expected to react positively after the company reported a strong September quarter performance, driven primarily by its India business.

The company's India EBITDA per tonne surpassed estimates despite weak pricing during the quarter, while its European operations remained largely in line, supported by the Netherlands business.

For the quarter ended September, Tata Steel reported revenue of ₹58,689 crore against CNBC-TV18's poll estimate of ₹55,934 crore.

EBITDA came in at ₹8,897 crore as against the expected ₹8,480 crore, translating to a margin of 15.2%, in line with estimates. Net profit stood at ₹3,183 crore, above the poll estimate of ₹2,880 crore.

The India business continued to outperform, with sales volumes rising 8.6% year-on-year to 5.55 million tonnes, while adjusted EBITDA grew 23% to ₹8,255 crore.

EBITDA per tonne improved 13% to ₹14,863 compared to ₹13,131 in the same period last year. In Europe, EBITDA per tonne stood at $8, slightly below expectations of $10, though performance in the Netherlands remained steady.

Across regions, the Netherlands operation delivered ₹5,948 per tonne in EBITDA during the quarter, compared to ₹4,074 in the previous quarter and ₹1,509 a year ago.

Region	Q2FY26	Q1FY26	Q2FY25
Netherlands	₹5,948	₹4,074	₹1,509
UK	-₹13,510	-₹7,829	-₹25,214
India	₹14,863	₹15,240	₹13,131

The UK business continued to face challenges, posting a loss of ₹13,510 per tonne, narrower than the loss of ₹25,214 per tonne in Q2FY25.

In India, EBITDA per tonne moderated slightly sequentially to ₹14,863 from ₹15,240 in Q1FY26 but remained well above year-ago levels.

Finance costs fell 10% year-on-year to ₹1,775 crore. The company's cost-efficiency program delivered savings of ₹5,450 crore in the first half of FY26, against a full-year target of ₹11,500 crore.

Tata Steel's capex spend stood at ₹3,250 crore for the quarter and ₹7,079 crore for the first half of the fiscal.

In a strategic move, Tata Steel has executed a share purchase agreement with BlueScope Steel to acquire the remaining 50% stake in Tata BlueScope Steel for a cash consideration of ₹1,100 crore.

The acquisition, aimed at strengthening the company's downstream portfolio in India, values the asset at about ₹2,200 crore, implying a price-to-earnings multiple of nearly 36 times.

Morgan Stanley maintained an 'Overweight' stance on Tata Steel, with a price target of ₹200 per share. Jefferies has a 'Buy' rating on the stock with a price target of ₹200, while CLSA remains 'Hold' with a target of ₹170.

36 analysts have coverage on Tata Steel of which four continue to maintain a 'Sell' rating on the stock. 26 of them have a 'Buy' rating, while six have a 'Hold' rating. InCred has the highest target on the Street at ₹224.

Tata Steel shares ended 1.30% lower on Wednesday at ₹178.65. The stock has risen 11% so far in 2025.