Tata Steel (TATA IN) – Q4FY26 Result Update – India pricing to drive earnings; no relief for TSE – ACCUMULATE

Tata Steel (TATA) reported a strong cons. operating performance led by India. Tata Steel India (TSI) EBITDA grew 36% YoY driven by robust 10.5% volume growth and sharp rise in steel prices, which led realizations increasing by ~INR3,200/t QoQ. Despite higher coking coal costs during the quarter, TSI delivered EBITDA/t of INR15,303/t (PLe: INR14,610/t). TSE also returned to EBITDA positivity at USD2/t supported by healthy demand at Tata Steel Netherlands (TSN) and improved realizations at Tata Steel UK (TSUK). Implementation of revised safeguard measures in the UK from July 2026 onwards, is expected to support pricing and aid TSUK in achieving EBITDA breakeven during FY27. Additionally, mgmt. expects EU steel prices to gradually move closer to the US levels, supported by lower imports and improving regional demand. Higher volumes, ongoing cost optimization initiatives, safeguard measures and the phased implementation of CBAM are expected to support a broader recovery in profitability across TSE during FY27. TSN continues to face elevated environmental regulatory scrutiny at its IJmuiden facility, primarily related to emissions from legacy coke and gas plants. At CMP, the stock is trading at 6.8x/6.4x EV of FY27/28E EBITDA. We maintain ‘Accumulate’ rating with revised TP of INR 247 (INR 216 earlier) valuing at 7.5x EV/TSI EBITDA and reduced 5x TSE EBITDA.