The brokerage said Tata Steel is “poised for sustainable growth and margin upside” as its Indian operations benefit from capacity expansion, efficiency gains, and sustainability initiatives. Nomura expects the company’s asset utilization to improve to 96% by FY28, supported by higher operating leverage and lower conversion costs, which would “strengthen Tata Steel’s position as a highly efficient and sustainable steel producer in India.”
Cost advantage and European revival
Nomura noted that investor concerns over the potential expiry of Tata Steel’s iron ore mining leases after FY30 were “unwarranted and overstated,” adding that the company is likely to remain the lowest raw material cost-per-tonne player due to its non-auctioned captive mines, lower global iron ore prices, and reduced domestic auction premiums as supply rises.The brokerage said Tata Steel’s fully integrated 26.6 million tonnes per annum Indian capacity gives it one of the strongest cost positions in the industry.
On its overseas operations, Nomura projected that Tata Steel Europe would return to profitability by the end of FY26, aided by policy incentives, efficiency gains, and recovering demand, with expected EBITDA averaging GBP 60 per tonne once production ramps up.
Valuation and market context
Nomura derived its target price of Rs 215 by applying a slightly higher-than-historical mid-cycle one-year forward EV/EBITDA multiple of 6.9 times, compared to Tata Steel’s current 2.1 times price-to-book value. The brokerage listed potential risks, including delays in the expansion of Neelachal Ispat Nigam Ltd, weaker-than-expected demand growth, lower spreads, and persistently high iron ore prices beyond FY30.On Thursday, shares of Tata Steel rose as much as 1.9% to Rs 176 on the BSE. The stock has gained 28% so far in 2025 and 18% over the past year.
From a technical standpoint, Tata Steel trades below all eight key simple moving averages, signaling short-term to long-term bearish undertones. Meanwhile, the relative strength index stands at 54.7 and the MACD reading is at 1.5 above its center line but below the signal line.
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