TATA Steel has announced several exciting growth projects for India, including a significant expansion of its Neelachal Ispat Nigam Limited (NINL) facility. The company has received board approval to increase NINL's capacity from 1 million tonnes per annum (mtpa) to 5.8 mtpa. This expansion will be modeled after the KPO-II blast furnace, but with a focus on long products to drive efficiency.
Although the detailed capital expenditure (capex) will be announced by March 2026, it is expected to be similar to the benchmark for greenfield projects, as all supporting infrastructure will be built to reach a capacity of 10 mtpa. Additionally, TATA plans to add a 2.5 mtpa Thin Slab Caster & Rolling mill at Meramandali to enhance its thinner-gauge flats capacity, which will be aligned with the furnace relining planned for FY28.
TATA has also signed a Memorandum of Understanding (MoU) with Llyod Metals & Energy (LMEL) to partner in areas such as iron ore mining, logistics, pellet, and steel making. However, the 6 mtpa greenfield project in Maharashtra will depend on the economic feasibility of using low-Fe grade iron ore post-beneficiation.
Due to the current weakness in steel pricing, estimates have been cut by 2-3%. At the current market price, the stock is trading at 6.4x/5.8x EV of FY27/28E EBITDA. The revised target price is Rs188, valuing at 7x EV of Sep'27E TSI EBITDA, with a maintained 'Accumulate' rating.
Disclaimer: The views and investment tips expressed are those of the investment experts and not of the website or its management. It is advised to check with certified experts before taking any investment decisions.
Download the TradeKaizen app to practice F&O trading with real-time market data anytime, anywhere.
Get it on Google PlayConnect with fellow traders, share strategies, and improve your trading skills in our Telegram group.
Join Telegram