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Tata Steel: Healthy performance; Higher volumes and cost optimization will support performance amidst lower steel prices

ICICIdirect Research 14 Nov 2025 DISCLAIMER

On the consolidated basis, total operating income for Q2FY26 came in at ₹58,589 crore (up 9% YoY, 10% QoQ),  driven largely by healthy Indian sales volumes at 5.6 MT (up 9% YoY, 17% QoQ).
Consolidated EBITDA for the quarter came in at ₹8,897 crore with corresponding EBITDA margins at 15%, up 120 bps QoQ.
Notably, EBITDA/tonne an Indian operation witnesses a marginal decline of ~₹300/ton to ₹15,150/ton in Q2FY26, which is the best and lowest decline seen amongst domestic steel players in Q2FY26, supported by higher operating leverage and cost optimization initiatives.
The company has guided domestic steel prices to lower by ~₹1,500/ton QoQ, while coking coal prices increasing by ~$6/ton QoQ, which likely to weigh on India EBITDA margins in Q3FY26. Despite this, higher volumes from Kalinganagar plant and on-going continue cost optimization efforts, will help in supporting EBITDA above ~₹14,000/ton at Indian operations.
Moreover, the European Union’s protection measures aimed at reducing imports are expected to support Europe steel prices thereby aiding Netherland performance.
Nonetheless, we remain positive on Tata Steel driven by strategic capacity expansion at Indian operations (from current 26 MT to 40 MT by FY30), favourable domestic steel demand, upcoming extension of 12% safeguard duty supporting domestic steel prices, and continued focus on cost optimization across region.
Our last rating on the company was BUY with a target price of ₹200.

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