Tata Steel share price soars 6% after Dutch subsidiary unveils transformation plan

Tata Steel share price surged by 6% during Friday's trading session after the company revealed that its Dutch subsidiary, Tata Steel Nederland, launched an extensive transformation plan designed to boost its long-term competitiveness and speed up its transition to green steel.

The company has submitted an official Request for Advice to the Central Works Council in the Netherlands to begin discussions regarding the suggested changes, which include the elimination of roughly 1,600 management and support positions.

As per the filing, Tata Steel is dedicated to making its operations in the Netherlands one of the most competitive, successful, and efficient in Europe. To realize this goal, Tata Steel Nederland has implemented an extensive transformation program focused on a multi-faceted strategy that aims to enhance production efficiencies, reduce fixed costs, and optimize the mix of products and profit margins.

In FY2025, the operations in the Netherlands have bounced back, achieving liquid steel production levels close to full capacity at 6.75 MTPA, following a postponed reline of one of the blast furnaces that had previously hindered production in FY2024.

Nevertheless, the tough demand scenario in Europe, influenced by geopolitical events, trade and supply chain disruptions, along with rising energy expenses, has impacted operating costs and financial performance.

Antique Stock Broking, in its report, mentioned that the management's priority lies in minimising controllable costs through enhancing production efficiency, reducing fixed expenses, and optimizing the product mix.

These strategies are projected to cut controllable costs, which account for approximately 40% of total expenses, by about 15% in FY26 compared to FY25, aiming for savings of EUR 500 million and a potential positive effect of around EUR 70 per ton. The UK operations are expected to reach cash breakeven by 2QFY26, supported by a recent contract with suppliers for an advanced pickling line at Port Talbot.

“We maintain BUY rating with a SoTP-based TP of ₹152 based on an implied 6.6x FY27 EV/EBITDA target multiple,” said the brokerage.

Moreover, brokerage firm Motilal Oswal Financial Services mentioned that the Netherlands division is among the most efficient steel facilities of the organization. The restructuring may decrease personnel and additional expenses, resulting in long-term enhancements in profitability. The company anticipates that its UK operations will reach breakeven by 2QFY26.

“Escalating trade tensions are likely to pose near-term challenges for commodities like ferrous. Developments related to tariffs will remain a key monitorable in the near to medium term. Tata Steel is trading at 5.6x EV/EBITDA and 1.6x FY27E P/B. We reiterate our Neutral rating with an SOTP-based TP of ₹140,” said Motilal Oswal in its report.

Tata Steel share price today

Tata Steel share price today opened at an intraday high of ₹134.95 apiece on the BSE, the stock touched an intraday low of ₹130.40 apiece. According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, Tata Steel share price have seen a gap up opening along with the broader markets, and is up more than 5%. the positive momentum could continue with immediate resistance at ₹140 as immediate resistance. Bullish gap left today around ₹130 will now act as immediate support.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.