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On Wednesday, Citi analyst Raashi Chopra increased the price target for Tata Steel (NSE:TISC) Ltd (TATA:IN) to INR135.00, up from INR115.00, while keeping a Sell rating on the stock. The adjustment comes as the company’s adjusted EBITDA reached Rs65 billion, which was consistent with projections but represented a decrease of about 7% year-over-year and an increase of roughly 13% quarter-over-quarter.
Tata Steel’s EBITDA per ton in India adjusted to Rs13,250, compared to Rs12,100 in the previous quarter and Rs15,200 in the same period last year. Meanwhile, the European operations recorded an EBITDA per ton of negative $38, which is a slight improvement from negative $45 in the third quarter and negative $39 year-over-year.
For the fiscal year 2025, the adjusted EBITDA forecast for Tata Steel is Rs243 billion, up from Rs231 billion in fiscal year 2024. The company has outlined cost savings targets for fiscal year 2025, amounting to Rs66 billion across various regions, including the UK, India, and the Netherlands. These savings are anticipated to come from improvements in raw material efficiency, controllable costs, employee costs, and supply chain management. Looking ahead to fiscal year 2026, Tata Steel is targeting even more substantial cost savings of Rs115 billion.
The company’s net debt-to-EBITDA ratio stood at 3.2x, a slight improvement from 3.3x as of December 2024. Despite current spot EBITDA per ton being higher than in the fourth quarter, Citi’s analysis suggests that spot prices are likely to decline, as they are currently at a Rs3,000 per ton premium to import parity, which could negate potential cost benefits.
Citi’s report indicates that the market may have already factored in a significant amount of optimism regarding Tata Steel’s future performance. The stock is trading at 7.5x its estimated September 2026 EV/EBITDA, which is above the 15-year average plus one standard deviation, typically around 7.3x. Despite the increase in the price target, the Sell rating suggests a cautious stance on the stock’s valuation at current levels.
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