Tata Steel net profit beats analyst estimates on higher volumes and cost takeouts

Net profit at domestic steelmaker Tata Steel Ltd rose eightfold in the December quarter, with its core business benefiting from high volumes, operating leverage and tight cost control in a weak price environment. Of course, this was also helped by the low base of charge-offs at Tata Steel Europe last year.

Meanwhile, the company’s European business continued to struggle in a challenging environment marked by weak demand, price pressure and delayed policy support, particularly in the UK. Operating income fell significantly in the Netherlands and losses improved marginally in the UK.

On Friday, the company reported consolidated net profit attributable to owners ₹2,688.7 crore ₹326.64 crore in the 3rd quarter of FY25. Beat the performance too ₹2,527.61 crore is the consensus estimate from 14 analysts surveyed by Bloomberg.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 38.9% compared to the same period of the previous year ₹8,199 crore, compared to ₹5,903 crore in the same period of the previous year.

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However, the company’s sequential growth figures revealed a different picture; net profit fell 13% compared to the previous year. ₹3,102 crore in the second quarter and revenues fell 3%.

“Domestic steel prices in India were at multi-year lows, putting pressure on steel spot spreads. Despite this, our India operations achieved an EBITDA margin of ~23%, helped by value-based growth and cost optimisation,” Koushik Chatterjee, managing director and chief financial officer of Tata Steel, said in a statement, adding that the company continues to focus on volume growth, downstream investments and strengthening of raw material linkages.

“December quarter prices, especially the first part of that quarter, were probably the lowest in the last five years for flat products,” Tata Steel CEO and managing director TV Narendran said in a post-earnings interaction with analysts.

“Steel prices are definitely returning to the levels they should be because in the past there were discounts on imports,” said Narendran, adding that attention should also be paid to the increasing costs of coking coal, which is an important raw material for steel production.

While Suman Kumar, vice president of metals and mining at brokerage firm Philip Capital, said the third-quarter performance was largely in line with expectations, he noted that the increase in net profit compared to last year’s figures was “due to a one-time write-down and provisioning required due to Tata Steel Europe shutting down its blast furnaces around September.”

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However, Kumar said Tata Steel’s EBITDA per tonne ₹It stood out compared to its 12,000 peers. “JSW Steel and JSPL report EBITDA ₹While it was in the range of 7,000-8,000 per tonne, SAIL’s EBITDA per tonne was much lower at approx. ₹4,600. This wide differentiation highlights Tata Steel’s superior product range and structural cost advantages. “Despite a weak operating environment, strong mix, cost control measures and volumes supported earnings and partially offset pressure on realizations due to weak pricing,” he said.

Meanwhile, the country’s second-largest domestic steelmaker by capacity reported a 6% year-on-year increase in consolidated revenue. ₹57,002.40 crore in the third quarter of FY26. ₹53,648.3 crore compared to the same period last year. Revenue was higher in Q2 FY26 ₹58,689 crore.

The steelmaker’s crude steel production in India rose 12% sequentially to 6.34 million tonnes, while deliveries rose 9% to 6.04 million tonnes.

For its overseas operations, the steelmaker’s Dutch operations reported an EBITDA of €55 million, significantly lower than €92 million in the second quarter of 2026. The loss in England decreased from £66 million in the second quarter of 2026 to £63 million.

“UK market conditions remain under pressure due to declining demand, while policy interventions are taking longer than expected to be rolled out. We are closely monitoring the situation and the evolving tariff framework and CBAM in the EU, which are crucial to rebalancing EU market dynamics,” Chatterjee said. CBAM stands for carbon border adjustment mechanism.

Narendran expects the carbon tax to improve steel prices in Europe. “CBAM and the safeguard revisions expected from June 2026 will structurally improve the competitive environment for EU manufacturers,” he said.

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Chatterjee also evaluated the issue and said, “regardless of the demand situation, there will be an increase in prices because arithmetically it has to work that way.”

Chatterjee noted that there are two very basic regulatory triggers that will increase prices in the EU. “One is CBAM, the second is the revision of safeguard measures from June 2026,” he said.

Tata Steel had previously guided for UK EBITDA breakeven by Q26, which was pushed into the final quarter of the current financial year. But there is some uncertainty around accessing the guidance.

“Until the UK government takes a step on imports or steel prices rise in the UK, there will be no positive situation,” said Narendran. “We hope the UK government will take some action in the next few weeks,” he added.

Tata Group company reported that the notification of four new Labor Laws by the Government of India has led to exceptional remuneration: ₹61.11 crore (independent) and ₹81.79 crore (consolidated) in results as per the current valuation of the company.

The company spends ₹Capital expenditure during the quarter was ₹3,291 crore, while net debt decreased by ₹3,291 crore ₹5,206 crore respectively ₹81,834 crore.

The stock closed down 0.3 percent. ₹197.05 on BSE on Friday.