Tata Steel Shares Hit 52-Week High After U.K. Deal; Here's What Analysts Say

Maintains an 'equal-weight' rating with a price target of Rs 110, implying a 16.6% downside.

Positive as UK business uncertainty was an overhang.

Helps the company strive towards decarbonisation since this would be among the first green steel plants in Europe.

Management expects cost recovery over the life of the project with 15–16% rate of return.

The UK government will also support in scrap and renewable-energy availability along with green transition as the carbon border adjustment mechanism kicks in.

Project capex to be funded through internal equity.

Maintains 'neutral' rating with price target of Rs 120, implying a 9% downside.

Facility to help curb emissions of up to 50 million tonne of carbon dioxide over the next decade.

While the investment is encouraging, the brokerage awaits more clarity on financials, write-offs and other operational details.

Clarity on restructuring and other details expected after the second quarter results.

The stock is currently trading at 6.3 times FY25E EV/Ebitda and 1.4 times its FY25E price to book.

Existing UK facility had operational issues due to assets nearing end of lifespan leading to higher operating costs.

Tata Steel UK to import additional steel substrate to feed its downstream unit.

Maintains 'buy' rating with price target of Rs 145, implying a 9.8% upside.

Investment is a missed opportunity to reduce exposure to historically high-cost low-margin geography.

Decision to either invest in a new plant or stop crude steel production at the facility was imminent.

Investment of £750 million over an expected four-year period implies a cash outflow of Rs 230 million per year.

Cash outflow management with the brokerage expecting free cash flows of $1.4–1.9 billion annually during fiscal 2025–26

The company expects the facility to see £150–170 per tonne of higher spreads.

The management is aiming to transform the UK business into a sustainable, capital-efficient and profitable business.

Maintains 'buy' rating while upgrading the target price to Rs 150 from Rs 135, implying a 13.6% upside.

Development is a step in the right direction and if the proposal is approved, could sustainably reduce UK losses.

In Tata Steel Europe, the UK business is the key loss-making entity with a fourth quartile cost structure.

The EAF would be able to source scrap at a competitive cost locally as the UK is a net exporter of 9 MT of scrap annually.

The potential restructuring cost can offset the reduction in losses from the UK over FY24–26E and be cash-flow neutral.

Retains buy rating while upgrading the target price to Rs 150 from Rs 135, implying a 13.6% upside.

The development is significant as support from the parent for the UK operations is likely to reduce in future.

Development to ensure the future readiness of the business from both profitability and ESG perspective.

Incremental value of Rs 10–16 per share at the steady state based on different scenarios of cost-saving potential.

The British industry supercharger scheme is likely to aid EAF-based operations more than blast furnace-based operations.

The brokerage expects both additional restructuring costs and policy support as the consultation process picks up.