Motilal Oswal: Tata Steel (BUY)

Motilal Oswal remains bullish on Tata Steel, highlighting its aggressive capacity expansion plans and strategic focus on cost efficiency. The company is targeting a major capacity boost from 26.5 million tonnes per annum (mtpa) in FY25 to 40 mtpa by FY30, supported by significant investments in both India and Europe.

• The Kalinganagar integrated expansion to 8 mtpa (₹27,000 crore investment) is progressing as planned, with Phase III targeting an additional 13 mtpa.
• Domestic scaling includes ramping up NINL from 1 mtpa to 4.5 mtpa and adding new electric arc furnace (EAF) capacities at Ludhiana and Meramandali.
• In Europe, Tata Steel is shifting toward green steelmaking by transitioning Port Talbot to a 3 mtpa EAF + DRI setup in the UK and exploring a similar model at IJmuiden in the Netherlands.

The brokerage expects domestic operations to benefit from improved steel price realizations, better operating leverage, and enhanced cost controls. Additionally, the safeguard duty implementation could help domestic players achieve superior realizations against imports.

At the current price, Tata Steel trades at a compelling valuation of 6.8x EV/EBITDA and 1.9x FY27E price-to-book (P/B). The firm’s balanced global exposure, robust capacity pipeline, and focus on decarbonization align with the structural steel demand recovery in India. Motilal Oswal upgraded the stock from Neutral to BUY, setting a target of ₹210 based on the September FY27 sum-of-the-parts (SOTP) estimate.

Elara Capital: Zen Technologies (BUY)

Elara Capital reiterated its BUY recommendation on Zen Technologies, noting the company’s expanding defence portfolio and execution visibility post the India-Pakistan conflict simulation orders. Despite short-term headwinds from deferred inflows in H1FY26, Elara sees sustained long-term growth supported by robust government demand and increasing export visibility.

• Revenue guidance implies a compounded annual growth rate (CAGR) of 50% for FY25–FY28 driven by strong simulator and defence training order execution.
• EPS forecasts for FY27E and FY28E were trimmed modestly by 7% and 6% due to order delays, but the long-term demand trajectory remains solid.
• EBITDA margin improved sharply to 63.6% in Q2, expanding 1,340 basis points YoY on account of high-margin simulator deliveries.
• Elara expects EBITDA margin and PAT margin to sustain at 35% and 25%, respectively, for FY26E–FY28E.

At 38x September FY27E earnings, Zen Technologies trades below private peers, offering a relative valuation comfort. The company’s execution of key simulator projects for the armed forces and export contracts are likely to accelerate growth momentum in H2FY26. Management also expects higher subsidiary contributions and steady order inflows to drive earnings CAGR of 24% over FY26–FY28, supported by a strong average ROE and ROCE of 19% each.

While near-term volatility could persist, the brokerage maintains its BUY stance, underscoring Zen’s unique position in simulation-driven defence technology and rising geopolitical relevance.

Sector Takeaway — Metals & Defence

The latest updates from brokerages indicate a growing divergence in sectoral drivers: while metal producers like Tata Steel are capitalizing on domestic infrastructure-led demand, defence technology firms such as Zen Technologies are benefiting from strategic spending cycles. Both sectors are expected to maintain above-market growth in FY26, backed by supportive policy frameworks and robust earnings visibility.