After the release of their Q2 results, major Tata Group companies—Tata Steel, Tata Chemicals, and Voltas—have received varied recommendations from financial analysts. While Tata Steel garnered mostly positive 'Buy' ratings, the outlook for Tata Chemicals and Voltas remains more diverse, ranging from 'Neutral' to 'Negative' or 'Hold'.
Tata Steel: Strong Buy Consensus Amidst Varied Targets
Tata Steel's September quarter performance has largely impressed analysts. Out of 19 recommendations, the majority are 'Buy', with only one 'Sell', two 'Reduce', and one 'Neutral' call. IIFL set the highest 12-month target price at Rs 250, despite implying a 9 percent potential downside from current levels, while Dolat Capital provided the lowest target at Rs 170.
Jefferies maintained a 'Buy' rating for Tata Steel, setting a target of Rs 240. The firm increased its FY27-29 earnings estimates by 2-5 percent, surpassing Street estimates by 6-14 percent. Jefferies highlighted a 14 percent sequential rise in Q2 EBITDA, exceeding their forecast by 4 percent. They anticipate expanding India margins due to higher steel prices offsetting increased costs, although volume growth may be modest between FY28-30E.
Emkay Global also reiterated a 'Buy' recommendation with an unchanged target of Rs 210. They noted that strong India volumes compensated for higher coking coal costs, despite widening losses in the UK operations. Emkay expects India's operations to remain robust in Q3FY27, supported by better realizations, incremental volumes, and cost efficiencies. European profitability is projected to gradually improve, though the UK's breakeven point remains uncertain.
Tata Chemicals: International Weakness Dampens Outlook
The sentiment surrounding Tata Chemicals is more subdued, with analyst views ranging from 'Neutral' to 'Negative'. Axis Capital is the sole brokerage with a 'Buy' call, setting the highest target at Rs 880. In contrast, Morgan Stanley gave the lowest target of Rs 529.
Q2 performance for Tata Chemicals was muted, marked by a 29 percent year-on-year decline in consolidated EBITDA. This was largely attributed to significant EBIT declines across its international subsidiaries (TCNA, TCEHL, Rallis) and an operating loss reported by TCAHL following the suspension of its Kenya operations. However, the Indian standalone business showed healthy performance, with EBITDA up 22 percent year-on-year, driven by increased salt volumes and higher realizations across products.
MOFSL assigned a 'Neutral' rating with a target of Rs 600. They noted that while domestic demand remains healthy, supported by solar glass capacity additions and infrastructure investments, pricing pressure persists due to imports and increased domestic supply. International operations continue to struggle with global soda ash oversupply, Chinese export pressure, and elevated energy and logistics costs. Near-term realizations are expected to remain range-bound, with recovery contingent on supply rationalization and demand growth.
Voltas: Cost Inflation Challenges Profitability
Voltas faced a challenging Q2FY27, with cost inflation significantly impacting profitability and leading to trimmed estimates. The company's EBITDA missed Street estimates by a substantial 58 percent, primarily due to weak margins in its Unitary Cooling Products (UCP) and Electro-Mechanical Projects (EMP) segments. Despite a 32 percent year-on-year surge in RAC (Room Air Conditioner) volumes, steep raw material costs resulted in an EBIT loss.
At least nine 'Hold' or 'Neutral' recommendations were issued for Voltas in November by firms including Investec, DAM Capital, Nomura, MOFSL, and CLSA. MOFSL set the lowest 12-month target at Rs 1,000, implying a 9 percent potential downside, while Citi provided the highest target at Rs 1,450.
Nuvama maintained a 'HOLD' rating, rolling forward its December 2027 target to Rs 1,250 (from Rs 1,220). The firm trimmed its FY27E/28E EPS estimates by 4 percent and 6 percent, respectively, to account for margin headwinds. Nuvama highlighted that Voltas' market share expanded to 17.4 percent, maintaining a 4.2 percentage point lead over its nearest competitor. The company remains focused on market share gains while aiming for absolute profit growth, with suboptimal channel inventories expected to drive a strong Q4.