Citi has reiterated its Sell rating on Tata Steel and retained its target price at ₹115, citing continued challenges in its European operations and broader concerns from escalating global trade tensions. The brokerage noted that while Tata Steel Netherlands (TSN) has initiated a comprehensive transformation programme to cut controllable costs by 15%, this may not be enough to offset deteriorating demand conditions in Europe.
Citi observed that Tata Steel Europe has struggled in recent years due to geopolitical developments, trade disruptions, and surging energy costs. Europe steel spreads fell to a trough of €170/ton in Q3FY25, well below the historical average of €240/ton.
The transformation programme at TSN is expected to yield €500 million in cost savings in FY26 and a further €50–60 million in FY27 through enhanced production efficiency, workforce reduction, and product mix optimisation. While this may result in an EBITDA per tonne improvement of $70–80, Citi remains cautious. “We are unsure of the negative impact arising from global tariffs on demand and margins,” the brokerage said.
Citi warned that despite cost efficiencies, rising trade barriers and weaker European demand could continue to drag on Tata Steel’s profitability in the coming quarters.
Disclaimer: The above views are of the broker’s and not the author or the publication’s. Please make any and every investment decision after consulting your financial advisor.
