HSBC has maintained its buy rating on Tata Steel with a target price of ₹215 per share, citing improving structural tailwinds in Europe following the implementation of the Carbon Border Adjustment Mechanism (CBAM). The brokerage believes Tata Steel’s European footprint positions it well to benefit from the evolving regulatory landscape.
HSBC noted that European steel companies have rallied sharply over the past six months, driven by clearer visibility on CBAM implementation. The brokerage expects European steel prices to move higher, which could result in upside risks to Tata Steel Netherlands’ earnings estimates.
The firm highlighted that Tata Steel’s 7 million tonne European footprint offers meaningful exposure to this improving pricing environment. Against this backdrop, HSBC finds Tata Steel’s recent underperformance surprising, particularly when compared with the strong rally seen in European peers.
HSBC believes that as CBAM-driven pricing benefits start reflecting more clearly in earnings, Tata Steel could see a re-rating, supported by improving realisations and operating leverage in its European operations.
Disclaimer: The views and recommendations above are those of HSBC. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.