Shares of Tata Steel jumped as much as 6% on Friday to Rs 134.95 on the BSE after the company announced plans to slash 1,600 jobs in the Netherlands as part of a sweeping cost-reduction initiative aimed at restoring profitability in its European operations.
The steelmaker said on Wednesday it would cut roughly 20% of its Dutch workforce, primarily at its IJmuiden plant, targeting more than 500 million euros in cost savings over FY26–27. The reorganisation will primarily affect management and support roles, as the company seeks to centralise and streamline operations amid mounting competitive pressures from low-cost Chinese imports and rising U.S. tariffs, according to a Reuters report.
The Dutch division posted a 556 million euro loss for the year ended March 31, 2024, weighed down by high energy prices and declining demand. Tata Steel also faces regulatory pressure to reduce pollution from the IJmuiden plant, which is among the Netherlands’ largest industrial polluters.
Investor sentiment was lifted by the aggressive cost-cutting move, which some brokerages believe could bolster long-term profitability, even as near-term demand risks persist.
JPMorgan maintained an “Overweight” rating on the stock with a target price of Rs 180, implying a potential upside of about 33.4% from current levels. The brokerage said Tata’s structural cost-reduction initiatives “should not be ignored” despite a tough macroeconomic backdrop and likely investor focus on potential demand destruction.
Macquarie reiterated its “Outperform” rating with a target price of Rs 156, representing an upside of 15.6%. The brokerage noted that the Netherlands restructuring should aid cost optimisation and support decarbonisation-linked capital expenditure. Macquarie said it expects the savings target to begin reflecting in the second quarter of FY26 and be fully achieved by the fourth quarter, without requiring significant additional capex.
CLSA maintained a “Hold” call with a target price of Rs 145, indicating limited upside of 7.5%. The brokerage said the transformation programme for the Netherlands business aims to reduce controllable costs by 15% and deliver 500 million euros in annual savings from FY26, potentially improving profitability by 80 euros per tonne.
Citi, however, retained its “Sell” rating with a target price of Rs 115, signaling a downside risk of 14.8%. While acknowledging that the transformation plan could improve EBITDA by $70–80 per tonne, Citi said it remains cautious about the potential negative impact of global tariffs on demand and margins.
Also read | Tata Steel to cut around 20% of Dutch workforce
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
The steelmaker said on Wednesday it would cut roughly 20% of its Dutch workforce, primarily at its IJmuiden plant, targeting more than 500 million euros in cost savings over FY26–27. The reorganisation will primarily affect management and support roles, as the company seeks to centralise and streamline operations amid mounting competitive pressures from low-cost Chinese imports and rising U.S. tariffs, according to a Reuters report.
The Dutch division posted a 556 million euro loss for the year ended March 31, 2024, weighed down by high energy prices and declining demand. Tata Steel also faces regulatory pressure to reduce pollution from the IJmuiden plant, which is among the Netherlands’ largest industrial polluters.
Investor sentiment was lifted by the aggressive cost-cutting move, which some brokerages believe could bolster long-term profitability, even as near-term demand risks persist.
JPMorgan maintained an “Overweight” rating on the stock with a target price of Rs 180, implying a potential upside of about 33.4% from current levels. The brokerage said Tata’s structural cost-reduction initiatives “should not be ignored” despite a tough macroeconomic backdrop and likely investor focus on potential demand destruction.
Macquarie reiterated its “Outperform” rating with a target price of Rs 156, representing an upside of 15.6%. The brokerage noted that the Netherlands restructuring should aid cost optimisation and support decarbonisation-linked capital expenditure. Macquarie said it expects the savings target to begin reflecting in the second quarter of FY26 and be fully achieved by the fourth quarter, without requiring significant additional capex.
CLSA maintained a “Hold” call with a target price of Rs 145, indicating limited upside of 7.5%. The brokerage said the transformation programme for the Netherlands business aims to reduce controllable costs by 15% and deliver 500 million euros in annual savings from FY26, potentially improving profitability by 80 euros per tonne.
Citi, however, retained its “Sell” rating with a target price of Rs 115, signaling a downside risk of 14.8%. While acknowledging that the transformation plan could improve EBITDA by $70–80 per tonne, Citi said it remains cautious about the potential negative impact of global tariffs on demand and margins.
Also read | Tata Steel to cut around 20% of Dutch workforce
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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