Citi has upgraded Tata Steel to 'buy' from 'neutral', on the back of attractive valuations, after a 32 percent underperformance versus the Sensex over the past year.
It said that the stock deserves a premium to global peers due to its raw material integration leading to steadier earnings.
Citi has said global steel margins will improve from 2013 on better volumes, and India earnings will remain stable.
"Europe EBITDA will rise from $18 to $31; recent stock underperformance leaves little room for downside," Citi said in a note on Friday.
Citi has said that Indian steel mills with captive raw materials, such as Tata Steel, are better placed to protect margins as prices weaken and steel imports rise.
Citi cut target price to Rs 430 from Rs 446.