Tata Steel's shares have staged a strong comeback in 2025, with a 25% year-to-date increase, but the market is now weighing execution risk against the company's long-term promise. The steel producer's stock has lifted 5% over the past week, driven by a series of board-approved expansion projects and a strategic acquisition.
Expansion Plans and Strategic Moves
Tata Steel has announced several expansion projects, including a 4.8 million tonnes per annum expansion at Neelachal Ispat Nigam Ltd, which will increase the company's exposure to long products, primarily serving the retail construction market. The project is expected to be completed within 24-30 months and will likely lift EBITDA per tonne once commissioned.
Other capacity additions include a 2.5 mtpa thin slab caster and rolling mill at Meramandali in Odisha, and a 0.7 mtpa hot-rolled pickling and galvanizing line at Tarapur in Maharashtra. The Tarapur unit will manufacture advanced grades of automotive steel, demand for which is currently met through imports.
HIsarna: A Low-Carbon Steelmaking Process
Tata Steel is also proposing a 1 mtpa plant based on HIsarna technology, a low-carbon steelmaking process that eliminates the use of coke and can process lower-grade iron ore and steel slag. Although the impact on earnings is limited in the near term, the process offers estimated cost savings of about Rs 3,000 per tonne and positions Tata Steel ahead of future carbon regulation.
Securing Raw Materials
Tata Steel has moved to strengthen its raw material security by acquiring a 50.01% stake in Thriveni Pellets Pvt. Ltd for Rs 636 crore, securing pellet supplies for its operations. The company has also signed an MoU with Lloyds Metals & Energy to collaborate in iron ore mining and explore the joint development of a 6 mtpa greenfield steel project.
Technical Analysis
Technical indicators suggest that the stock may be entering a consolidation phase, with Tata Steel trading above six of its eight key simple moving averages. The Relative Strength Index is at 50.4, indicating neutral momentum, while the MACD remains below its centre line.
Market Outlook
The market is in a wait-and-watch mode, with investors seeking clarity and equilibrium rather than repricing aggressively. Support is clustered in the mid-160s and resistance in the upper-170s, with the setup favouring consolidation unless momentum and participation improve meaningfully.
Remember, this is a perspective, not a prediction. It's essential to do your own research and consider multiple viewpoints before making any investment decisions.
- Key Takeaways:
- Tata Steel's shares have risen 25% year-to-date, driven by expansion plans and strategic acquisitions.
- The company's expansion projects, including the Neelachal Ispat Nigam Ltd expansion, are expected to increase exposure to long products and lift EBITDA per tonne.
- The HIsarna technology offers a low-carbon steelmaking process with estimated cost savings of about Rs 3,000 per tonne.
- Tata Steel has secured raw material supplies through the acquisition of Thriveni Pellets Pvt. Ltd and an MoU with Lloyds Metals & Energy.