Tata Steel Shares Surge 5% To Hit Fresh 52-Week High, Elara Capital Raises TP After Q3 Results

The shares of Tata Steel rose nearly 5 percent to hit a fresh 52-week high of Rs 206.40 apiece on Friday, February 9 after the steel major posted its results for Q3FY26. This Tata Group firm is currently among the top gainers on benchmark indices Sensex and Nifty, as well as on Nifty Metal index, which nearly rose up to 2 per cent.

Is Europe Recovery On The Cards For Tata Steel?

Tata Steel reported “consolidated EBITDA of ~INR 82bn, up ~39% YoY but down ~8% QoQ, broadly in line with our and Consensus estimates”. The strong performance was driven by domestic volume. Meanwhile, its consolidated EBITDA per tonne improved by “INR 2,340 YoY,” making TATA the only ferrous player in our steel coverage universe to report margin expansion during the quarter.

Also Read: Who Is Jeff D’Onofrio? The Washington Post's New CEO After Mass Layoffs

In Q4FY26, Netherlands operations profitability is likely to improve, supported by ongoing cost -reduction initiatives, while the domestic business should benefit from improving steel prices.

Additionally, the EU is likely to see supply-side restructuring, as blast furnaces due for relining are unlikely to be replaced without investment in new process routes. This structural shift should support steel price buoyancy in the region.

Key Tata Steel Management Expectations

EU steel prices to trend higher and move closer to US price levels, diverging from Asia prices. This is set to be driven by a reduction in imports, due to the implementation of the Carbon Border Adjustment Mechanism, tightening of product-specific import quotas, and an increase in import duties.

The management of this Mumbai-headquartered company also expects the potential for “nearly a EUR 100/ton ne increase in EU steel prices during the year, with the benefit set to accrue gradually rather than in a single step.”

Among the top three steel producers, TATA continues to "trade at a ~30 % discount to peers, due to concerns around its EU operations."

"The recent uptick in steel prices since mid -December, coupled with the imposition of safeguard duties on imports, should support near -term earnings growth. We reiterate our Accumulate rating on the stock. We increase our EBITDA estimates by 2% for FY26 while retaining our estimates for FY27 and FY28E," Elara Capital said.

"In light of the expected reduction in overhang on domestic operations to fund EU businesses, we revise our target valuation multiple for domestic operations to 6.5x (from 6.0x) EV/EBITDA. "We retain our target multiple of 5.0x for the other businesses. Additionally, we roll forward our valuation base to December 2027E from September 2027E. Accordingly, we raise our target price to INR 215 from INR 187," the brokerage firm noted.