Tata Steel Expands Its Reach
Tata Steel has agreed to buy a 50.01% stake in Thriveni Pellets (TPPL) for ₹6.36 billion. This acquisition gives Tata Steel direct access to a 4 million tonne per annum pellet plant and a 212km slurry pipeline. The facility is located in Jajpur, Odisha, which aligns with Tata Steel's eastern operations.
Key Benefits of the Acquisition
- Tata Steel will become the controlling shareholder of TPPL, with Llyods Metals & Energy (LMEL) holding a 49.99% stake.
- The acquisition secures long-term pellet supply for Tata Steel's India operations.
- Pellets are a key raw material for Tata Steel's manufacturing processes, including BF-BOF and DRI units.
This move is part of Tata Steel's long-term strategy to secure feedstock, especially with iron ore mining leases set to expire by 2030. Tata Steel is trading at 6.5 times EV/EBITDA and 1.8 times FY27E P/B. The company's backward integration strategy aims to reduce dependence on external suppliers and increase efficiency.
Investment Outlook
Based on the acquisition and Tata Steel's overall performance, the company has maintained a BUY rating with a target price of ₹210. This is based on the company's EPs estimate for September 2027.
Investors are advised to consult with certified experts before making any investment decisions. Tata Steel's acquisition of Thriveni Pellets is expected to have a positive impact on the company's operations and future growth.