In a note on Friday, March 20, HSBC maintained its “buy” rating on Tata Steel, and raised its price target to ₹250 from ₹235 earlier. The revised price target implies an upside potential of 31% from Thursday’s closing levels.
The UK has recently announced import protection with a 50% import tariff and import quotas being cut sharply. This is to ensure the future of the UK steel sector, amidst concern of global overcapacity. Quotas on imports of many overseas steel products will be cut by 60%, according to reports.
These measures announced by the UK come on the back of the European Union announcing that it will impose a carbon price on imported steel based on its emissions intensity, starting fully from January 1 this year. It covers raw materials (agglomerated iron ore), pig iron, ferro-alloys, and finished steel products.
The government of India has already imposed a safeguard duty for a three-year period on specific flat steel products to curb a cheap imports surge, particularly from China, Vietnam and Nepal.
According to HSBC, Tata Steel’s key regions now have multi-year import protections in place, and as a result, the brokerage has raised its Tata Steel’s earnings expectations for financial year 2027-2028 earnings by 5% to 14%.
Although the India business has near-term demand concerns, but it has higher margins and prices over financial year 2027-2028, according to HSBC, who added that with steel now having domestic protection, the next positive catalyst will be China exports / production cuts.
36 analysts have coverage on Tata Steel, 23 of them have a “buy” rating, seven say “hold”, while six have a “sell” rating on the stock. The consensus estimates project an upside potential of 7.6% from Thursday’s close.
Shares of Tata Steel are trading 4.2% higher on Friday at ₹198.6, and are the second-best performers on the Nifty 50 index.
