Tata Steel (TATA) reported Q4FY20 EBITDA above our/consensus estimates by 12%/8% at Rs46.5bn (up 48% QoQ/down 38% YoY), led by higher than expected earnings in TATA Steel Europe (TSE). While, Indian operations reported earnings in line with our expectation. Stock moved up ~20% over last couple of months in light of improvement in global prices (up 15% from bottom), low input prices and gradual recovery in domestic demand. However, we expect prices to weaken in H2CY20 due to ease in China’s pent-up demand and sharp increase in Chinese steel production. Weak market outlook, coupled with over-stretched debt levels (Net debt/EBITDA of 5.0x on normalized FY22e earnings) and weak overseas asset portfolio, justifies our negative view on the stock. Hence, we maintain Reduce rating with TP of Rs250 (Earlier Rs240), EV/EBITDA of 6.3x FY22e.