Steel stocks seem rock solid. In the recent past, they have traded positively. The share price of Tata Steel, for example, 2.8 per cent on September 8 to touch a 52-week high of Rs 172.45 on the Bombay Stock Exchange, buoyed by renewed optimism in the sector. The rally was fueled by supportive global supply trends, domestic tariff safeguards, and upbeat outlooks from top brokerages.
Although the new slabs in the Goods and Services Tax (GST) only simplify taxation for steelmakers, it does reduce the cascading taxes across the supply chains. For Tata Steel, this implies a neutral-to-slightly positive impact on operations, as steel will continue to attract the standard slab of 18 per cent, and a few value-added products may face minor adjustments. However, the demand from the automobile and infrastructure sectors, due to lower GST, may rise as downstream industries benefit from lower indirect costs.
There are positive external factors. According to media reports, China plans to trim domestic steel production in 2025 and 2026, as part of ongoing efforts to cool down the overheated economy, and address issues related to manufacturing overcapacities. The move is expected to curb the flow of cheap metal into India, which will give a boost to the Indian steelmakers, like Tata Steel.
In August, the US Federal Reserve Chair Jerome Powell indicated that a weakening job market could push the central bank to cut interest rates. Given this backdrop, and the impact of America’s tariffs on local consumers and inflation, investors anticipate a rate cut when the Fed meets to consider it at its upcoming meeting (September 16-17). The move will make investments in America less attractive, and drive more capital towards higher-growth markets like India, offering potential support to metal stocks.
According to media reports, the Indian Government is working on a national mission, with an estimated outlay of Rs 5,000 crore, to promote sustainable steel production. The initiative will cover both primary and secondary producers, and will be designed to accelerate decarbonisation in the sector through financial incentives such as concessional loans and risk guarantees.
According to experts, although the new GST regime adds structural efficiency for steelmakers like Tata Steel, the stock performances hinge more on steel-cycle recovery, cost savings execution, and global trade policies. Thus, a combination of local and global factors will influence investors’ interest. Let us take a closer look at the stock movement and financials of Tata Steel.
Over the past few days, ever since GST 2.0 was announced, the stock has moved in a range, between the high Rs 160s and low Rs 170s. Over the past month, though, it rose by almost 10 per cent. During the same 30-day period, while the Nifty 50 and Nifty 500 indices rose by just over two per cent each, the Nifty Metal Index increased by almost 6.5 per cent. In the past 12 months, the differences are stark: 0.07 per cent, 2.25 per cent, and 6.26 per cent, respectively.
According to Elara Capital, Tata Steel’s Q1-FY26 consolidated EBITDA increased more than 11 per cent YoY (Year-on-Year), and 13 per cent QoQ (Quarter-on-Quarter) more than Rs 74 billion. This was broadly in line with two brokerages’ consensus estimates of Rs 71-72 billion. While volumes declined due to maintenance shutdowns at the company’s plant in Jamshedpur (Jharkhand), and Neelanchal Ispat Nigam, improved prices supported the margins.
The overseas business did well. In the European Union, the operations posted the highest EBITDA in the past 10 quarters. “Tata Steel achieved cost savings of Rs 66 billion in FY25, on the back of Rs 28 billion savings from India, Rs 26 billion from the UK, and Rs 11.5 billion from the Netherlands. For FY26, it targets Rs 115 billion in savings, with Rs 45 billion from the Netherlands, Rs 40 billion from India, and Rs 30 billion from the UK,” states Elara Capital’s report.
According to Motilal Oswal Financial Services (MOFS), net debt stood at Rs 848 billion as of Q1-FY26. This translates into a net debt/EBITDA ratio of 3.21x as of June 2025. “Total cost savings target of Rs 115 billion will be achieved in 12-18 months, of which Rs 44 billion (Rs 15 billion in FY25, and Rs 29 billion in Q1-FY26) has been realised by the first quarter of this year. Overall, the quarter witnessed a decent performance, primarily driven by EBITDA improvement in the European division, states the brokerage’s report.
According to brokerage houses, there are a few risks. These include increased imports (if China does not slow down), slower-than-expected ramp-up of new capacity (due to unexpected delays), rising coking coal and iron ore costs, and weakening demand from major end-user industries (if auto and housing do not pick up as expected).
The average prices of hot rolled coils are already down by more than Rs 2,400/tonne during the second quarter of the financial year, compared to the levels in Q1-FY26. However, the Indian operations are likely to benefit from improved volumes if things go as per the plans. Lower imports, especially from China, the ramp-up in Kalinganagar, and the ongoing cost-savings efforts need to work in the company’s favour. Also, the gradual improvements in profitability in the UK and the Netherlands units bode well. Elara Capital wants the investors to accumulate the stock. It raises the increase in Tata Steel’s EBITDA by 1-3 percent in FY26, FY27 and FY28.
Despite the risks mentioned earlier, and near-term uncertainties related to price volatility due to trade-tariff tensions, and recent correction in steel prices, Motilal Oswal feels that the long-term outlook remains strong. “We largely maintain our FY26/FY27 estimates, owing to decent performance during the quarter. At CMP (Current Stock Market Price), Tata Steel is trading at 7x FY27E EV/EBITDA and 2.1x FY27E P/B. We reiterate our Neutral rating with a revised… TP (Target Price) of Rs 165 per share,” it stated. Well, this target is past. The stock is hovering around Rs 170.