Another crucial quarter as Europe turnaround and India expansion remain key tests
Adding to the optimism, the company has secured up to €2 billion in financing from the Dutch government for its IJmuiden-based steel plant, a key step in the European decarbonisation plan.
However, the agreement has not been fully signed yet; Political uncertainty and the slow pace of the coalition-building process in the Netherlands could delay final approvals, testing investors’ patience.
Beyond closing this financial package, Tata Steel also needs to meet two key objectives: restoring profitability in its UK operations and increasing capacity in India to 40 million tonnes per year.
“The key focus in Europe will be on profitability in the UK and the Netherlands and understanding the challenges there, the path to decarbonisation and the role of government support, including grants,” said Aditya Welekar, senior research analyst at Axis Securities.
India expansion drive
The company first outlined its 40 million tonnes per annum (mtpa) capacity target in its FY23 annual report. N. Chandrasekaran, chairman of Tata Sons, reiterated the goal last year and ₹The annual capex to achieve this target by 2030 is 10,000 crore.
However, analysts describe the roadmap as “ambitious but vague”. Tata Steel’s immediate focus is to expand Kalinganagar to its full capacity of 8 mtpa by the end of 2025 and expand NINL (Neelachal Ispat Nigam Ltd) from 1 mtpa to 5 mtpa, pending regulatory clearances.
Once both projects are completed, the total capacity will reach 31-32 million tonnes/year, which will still be below the long-term target.
England’s comeback target
At the FY25 annual general meeting, Chandrasekaran set another milestone: Turning around the UK operations and making a net profit in the year.
Finance chief Koushik Chatterjee had previously said: Mint He said the transition from Ebitda breakeven to net profit “won’t take that long.”
Tata Steel, however, postponed its breakeven target from its second-quarter target to the end of FY26, citing disruptions in global trade and spillover effects of US tariff wars.
Given its presence in Europe, Tata Steel is expected to outperform its peers this quarter. Dutch operations will benefit from lower raw material prices, particularly coking coal and iron ore, which could reduce margins.
For these reasons, all eyes will be on Tata Steel’s July-September results to be announced on November 12.
Mint He lists the main areas to focus on in the company’s second quarter results:
Revenue and profitability
Analysts at Systematix Institutional Equities expect consolidated revenue to increase 7% year over year and 8% sequentially ₹57,640 crore, offset by lower steel prices driven by higher volumes.
According to analysts, the steelmaker’s margin expansion will be supported by “superior sales mix, cost control measures, operational efficiency and steady growth in volumes despite lower hot rolled coil steel prices”. EBITDA margin is expected to be around 14.2%, compared to 11.4% in the same period last year.
However, investors can expect net sales realizations (NSR) to decline by 4% due to lower steel prices. NSR is the average revenue earned per ton of steel sold after discounts and taxes are taken into account.
Profitability of European operations
Investors will keep a close eye on its European business, where lower use of coking coal is expected to boost EBITDA per tonne from $8 to $31, according to Axis Securities.
Motilal Oswal analysts expect the European segment to remain profitable but say management’s comments on the region’s outlook are critical.
Analysts will also continue to monitor updates on the progress of the new electric arc furnace at Port Talbot and whether it remains on track to be commissioned by the end of FY27.
Regarding the Dutch operations, investors will seek comment on what the final project cost is to decarbonize the IJmuiden facility and how far they are in completing detailed engineering design. One of the main concerns for analysts is how to manage the timings to ensure that British and Dutch plants are not shut down at the same time.
Demand and pricing
Weak monsoon rains and oversupply caused steel prices to fall during the September quarter, but there has been little recovery so far. Any signs of demand recovery or price improvement will be closely watched.
The 12% interim safeguard duty on steel imports expired last week and investors are awaiting clarity on the new progressive duty proposed by the DGTR to support domestic manufacturers.
Analysts globally will be looking for the management’s view on the EU’s Carbon Border Adjustment Mechanism – whether it will help or challenge Tata Steel’s competitiveness in Europe.
