Kotak Institutional Equities upgraded the stock to ‘Add’ from ‘Reduce’, although it lowered its target price to ₹1,280 from ₹1,380. The brokerage said adjusted EBITDA for the June quarter exceeded expectations, aided by higher sales volumes.
Kotak expects operating leverage and the reversal of maintenance shutdown-related costs to partly offset weaker steel prices in the September quarter. It also welcomed the new management team’s focus on ramping up production and completing ongoing expansion projects.
The brokerage said that the slurry pipeline project remains on track for commissioning in the second quarter of FY27, while coal dispatches from the Utkal B1 mine have already commenced. It expects steel volumes and EBITDA to grow at a CAGR of 27% and 49%, respectively, over FY26-29, supported by project completions and gradual margin improvement.
UBS maintained its ‘Neutral’ rating with a target price of ₹1,300. The brokerage said consolidated adjusted EBITDA of ₹26.7 billion was 9% ahead of its estimates, driven by better-than-expected steel production and sales volumes.
While production and sales were lower sequentially due to planned maintenance shutdowns, EBITDA per tonne improved on stronger steel prices and a richer value-added product mix, partly offset by higher coking coal costs and other expenses. UBS also noted that the company maintained its FY27 capital expenditure guidance of ₹85 billion.
Citi retained its ‘Sell’ rating with a target price of ₹980. The brokerage said adjusted EBITDA exceeded estimates on stronger realizations but remained lower than last year because of higher input costs.
Citi highlighted management’s focus on increasing value-added products, achieving full capacity utilization, lowering costs and maintaining capital discipline. However, it cautioned that recent declines in flat steel and long product prices could weigh on near-term earnings and believes the stock’s valuation remains expensive.
CLSA reiterated its ‘Outperform’ rating with a target price of ₹1,420. It said EBITDA per tonne improved sequentially despite lower quarterly volumes. While the brokerage believes the company’s FY27 volume guidance of 10.5-11 million tonnes may be challenging to achieve, it expects earnings to recover after a softer second quarter as steel prices improve and cost reduction initiatives begin to take effect.
CLSA added that stability in the senior management team and successful execution of expansion and cost optimisation projects will be key catalysts for a rerating.
