Tata Steel delivered a strong performance in the fourth quarter, with consolidated adjusted EBITDA rising to Rs 99.5 billion, marking a 20 per cent quarter-on-quarter increase. The figure came in around 5 per cent higher than both market expectations and brokerage estimates, largely supported by stronger steel realizations and a 6.2 per cent sequential rise in sales volumes. Improved pricing across markets helped offset the impact of higher coking coal costs during the quarter.
The company’s EBITDA per tonne increased 13 per cent sequentially to Rs 11406. In India, EBITDA stood at Rs98.4 billion, up nearly 19 per cent quarter-on-quarter, while EBITDA per tonne improved to Rs 15885 due to healthy domestic pricing trends.
Looking ahead, analysts expect the company’s first-quarter FY27 performance to remain healthy as margins continue improving across geographies. In Europe, pricing resilience is expected to continue due to the impact of Carbon Border Adjustment Mechanism (CBAM) regulations and safeguard measures aimed at controlling imports. Recent policy steps, including lower tariff-free import quotas and increased import duties, are likely to support steel prices in both the UK and European markets.
The UK operations are also expected to gradually reduce losses, with EBITDA breakeven likely by the second half of FY27 if current pricing conditions continue. However, expectations for the 3 million tonne UK Electric Arc Furnace (EAF) project have been pushed back by around 12 months because of delays in obtaining power connectivity.
In India, the benefits from the ramp-up of the Kalinganagar expansion are expected to reflect more meaningfully from FY27 onward. This is likely to add around 1.5 million tonnes of incremental sales volumes over FY26. In addition, the newly commissioned Ludhiana EAF facility is expected to contribute another 0.5 million tonnes.
Analysts also remain optimistic about Tata Steel’s profitability outlook. EBITDA per tonne for the Netherlands operations is projected to improve to around EUR75 by FY28 from EUR34 reported in Q4FY26. India EBITDA per tonne is expected to stay elevated near Rs16,000, supported by cost optimization initiatives and price revisions in automotive contracts.
Despite only minor revisions of around 1-2 per cent to EBITDA estimates for FY27 and FY28, brokerages have retained a ‘Buy’ rating on the stock with an unchanged target price of Rs 230.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions)
