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Concall Highlights: Long-term Strategy for Growth in India

Tata Steel, in its board meeting held on 10th Dec’25, affirmed the long-term growth strategy for its India business. It announced:

1) The much-awaited board approval for its NINL long products phase 1 expansion by 4.8 MTPA (from 1.1 to 5.9 MTPA), providing long-term growth visibility beyond 2030.

2) It has also approved 2.5 MTPA Thin Slab Caster and Rolling facilities at Tata Steel Meramandal to further enhance the finished steel capacity in the flats products.

3) Set up a 0.7 MTPA Hot Rolled Pickling and Galvanizing Line (HRPGL) at its existing Cold Rolling Complex in Tarapur, Maharashtra, for strengthening its automotive segments for import substitution.

4) MOU with Lloyd Metals & Energy to produce iron ore, set up a 6 mtpa greenfield steel plant in two phases, and assist Lloyd's in developing its ongoing steel plant expansions.

5) Signed definitive agreements to acquire 50.01% stake in Thriveni Pellets Private Limited (TPPL), subject to regulatory approvals. TPPL owns 100% stake in Brahmani River Pellet Limited (BRPL), which operates a 4 MTPA pellet plant at Jajpur, Odisha, along with a 212 km slurry pipeline. LMEL holds the balance 49.99% stake in TPPL.

6) Approved engineering work for a 1 MTPA Hisarna demonstration plant in Jamshedpur, scaling its proprietary low-carbon technology previously piloted for a decade at the Ijmuiden plant.

Key Conference Call Highlights – Building Multiple Optionalities

1) NINL Expansion (Core Upstream Growth in Long Products): Management received in-principle Board approval to proceed with detailed engineering for the 4.8 MTPA expansion at Neelachal Ispat Nigam Ltd (NINL), with final capex numbers to be disclosed by Mar’26 after full engineering validation. Environmental clearance is expected within 3-4 weeks, and execution will take 3 to 4 years post-final approval. The configuration is fully long-products oriented: Two rebar mills (~1 MTPA each), one rebar coil mill (~0.5 MTPA), and a high-end wire rod mill. The strategic rationale is to materially scale Tata Steel’s long-products franchise, leveraging captive ore, downstream service centers, and the strong Tata Tiscon retail network (10,000-12,000 dealers). Current long-product capacity of ~5.4 MTPA may cross 10 MTPA after the NINL build-out. Management reiterated that NINL will be supplied entirely from captive Koira iron ore mines, which are being expanded. Profitability is expected to mirror existing Indian BF-BOF sites (Jamshedpur, Kalinganagar). Premium product positioning (rebars-in-coils, alloy WR, tire cord quality) targets margin-accretive segments rather than commodity-grade longs.

2) Lloyds/Maharashtra MOU (Strategic Optionality in Western India): Tata Steel signed an MOU with Lloyds Metals & Energy covering four collaboration themes: (1) mining, beneficiation and slurry pipeline opportunities; (2) cooperation in developing Lloyds’ own 4.5-5.0 MTPA integrated steel plants (Tata may support engineering + offtake, but it will not be a JV); (3) evaluation of a new 6 MTPA greenfield Tata Steel plant in Maharashtra, potentially in two phases of 3+3 MTPA, subject entirely to iron-ore availability and logistics economics; and (4) evaluation of joint participation in mining infrastructure in the region. Management emphasised that the greenfield 6 MTPA project would be a Tata Steel plant, not a Lloyds JV, unless later structuring proves optimal. The decisive factor will be iron ore economics - quality, beneficiation cost, access, auction dynamics, and long-term supply assurance. Management highlighted that without secure domestic ore, expansions would be preferred near the coast (e.g., Kalinganagar) to enable import flexibility. Maharashtra’s advantage is proximity to consumption markets (West & South) and Tata’s downstream hubs (Tarapur & Khopoli). Discussions are at a preliminary stage; feasibility, mine linkages, costs, and structure will determine progression. Tata is deliberately preserving ore-sourcing optionality ahead of the 2030 mining auction cycle, where policy changes (premium caps, upfront bids) may impact economics.

Outlook:

We keep our company outlook unchanged from the results note published on 14th November 2025.

Valuation & Recommendation:

We maintain our valuation and recommendation unchanged from the last note published on 14th Nov’25. We continue to use SoTP and ascribe a 1-year Fwd EV/EBITDA multiple of 7.5x, 5.0x, and 4.0x to India standalone, other operations, and Europe, respectively, on Sep’27 EBITDA to arrive at our Sep’26 forward TP of Rs 195/share (Unchanged). The TP implies a 17% upside from the CMP. Hence, we retain our BUY rating on the stock.

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