Tata Steel Ltd. share price target

Profit has likely bottomed in Q2 as operations in Netherlands return to breakeven and India's H2 demand outlook looks up

We maintain our BUY rating on the stock post the removal of the overhang of the UK business restructuring.

Decarbonisation of UK operation can sharpen competitiveness and add potential value of Rs 6-7/sh for TATA

We revise our rating on the stock from HOLD to BUY.

Tata Steel (TSL) has announced deep restructuring of its UK operations (TSUK) with twin objectives of business continuity and sustainability. Key points: 1) Existing blast furnaces to be replaced by 3mtpa Electric Arc Furnace (EAF); 2) 40% of GBP 1.25bn investment to be funded through the grant by the UK government; 3) cost differential of GBP 150-170/te compared to current operations.

Q1 EBITDA broadly in line as standalone operations continued to clock a high EBITDA margin of Rs 14k/t