Nuvama has upgraded Tata Steel to a ‘Buy’ rating and raised its target price to ₹177, banking on improving profitability in European operations and margin expansion in Q1FY26. The brokerage’s optimism comes after the company delivered in-line Q4FY25 results, with notable strength in its standalone EBITDA and signs of a bottoming out in the Europe business.
In Q4FY25, Tata Steel’s standalone EBITDA rose 16% sequentially to ₹7,110 crore, with EBITDA per tonne climbing by ₹1,151 QoQ to ₹12,702. Consolidated EBITDA stood at ₹6,500 crore, marking a 13% quarter-on-quarter improvement, despite persistent losses in the UK operations.
The Netherlands operations, however, showed signs of recovery, and management commentary indicated a visible pathway to consolidated profitability in Europe in the quarters ahead.
Q1FY26 set to improve on pricing and coal costs
Nuvama expects Q1FY26 EBITDA per tonne to rise by nearly ₹2,000, aided by higher steel prices and easing coal input costs. The positive margin outlook is only expected to be marginally offset by softer volumes due to seasonal demand fluctuations.
The report highlights that Europe operations are expected to turn EBITDA-positive from Q1FY26, a major shift from the drag seen through FY24. This transition is driven by improved operational efficiency, partial cost pass-throughs, and a scaling down of high-cost inventories.
FY27 outlook upgraded on lower fixed costs
The brokerage has raised its FY27E EBITDA estimate by 6%, factoring in a structural improvement in Europe’s contribution and lower fixed costs amid ongoing restructuring. Tata Steel is also expected to benefit from cost optimization across its Indian and European portfolios as it streamlines capital deployment and strengthens its raw material linkages.
Nuvama’s bullish stance marks a shift from its earlier cautious tone, driven by tangible earnings triggers and improving macro tailwinds for the steel sector.
“Tata Steel is entering a phase of earnings revival, with the European turnaround finally within grasp and Indian operations providing steady margin support,” Nuvama noted.
Disclaimer: This article is based on the brokerage report by Nuvama. It does not constitute investment advice. Investors are advised to consult their financial advisors before making any investment decisions.
