Tata Steel Q2 profit rises 16%, beats estimates on strong India volumes, record auto performance

Tata Steel reported a 16.2% rise in Q2 net profit, beating estimates, as higher deliveries and strong India performance lifted earnings despite challenging global operating conditions and raw material costs.

Tata Steel | SBI Securities has ascribed a price target of ₹200 for the Tata Group stock for Samvat 2083, indicating an upside potential of 17%. It expects Tata Steel's revenue to grow at a Compounded Annual Growth Rate (CAGR) of 8.3% over financial year 2026-2028, while its EBITDA and PAT are likely to grow at a 17.6% CAGR and 36% CAGR respectively. Favourable HRC prices could more than offset the increase in costs, according to SBI Securities, who highlights a slowdown in steel demand in Indian and Europe, a downturn in HRC prices, regulatory and environmental concerns as some of the key risks.

Tata Steelreported a 16.2% year-on-year rise in consolidated net profit to ₹3,700 crore for the September quarter of FY27, beating the CNBC-TV18 poll estimate of ₹3,120 crore. Revenue from operations grew 11.5% to ₹65,436 crore, compared with ₹58,689 crore in the year-ago period.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 18.4% to ₹10,533 crore from ₹8,896 crore a year earlier. However, the EBITDA margin came in at 16.1%, slightly below the CNBC-TV18 poll estimate of 16.3%, though higher than 15.2% in the corresponding quarter last year.

India continued to anchor the performance. The domestic business reported revenue of ₹42,653 crore and EBITDA of ₹10,634 crore, translating into a margin of 25%.

Crude steel production in India rose 7% sequentially to 6.18 million tonnes, while deliveries increased 16% to 5.98 million tonnes. At the consolidated level, deliveries grew 9% quarter-on-quarter to around 7.92 million tonnes, while EBITDA increased 14% to approximately ₹10,665 crore, according to the company's management commentary.

India continued to be the cornerstone of our performance with volumes growing 16% QoQ despite a seasonally softer quarter, reflecting the strength of our market presence and customer reach T V NARENDRAN, CEO AND MD OF TATA STEEL

The company also recorded its best-ever second-quarter volumes in its Automotive & Special Products vertical at around 1.1 million tonnes, driven by 26% growth in high-end sales.

Our Automotive & Special Products vertical achieved ‘best ever’ 2Q volumes of ~1.1 million tons, driven by 26% growth in hi-end sales NARENDRAN SAID

Overseas operations presented a mixed picture. In the Netherlands, revenue stood at €1,395 million, with EBITDA of €72 million, supported by the restart of the Direct Sheet Plant in early August. The UK business, meanwhile, reported revenue of £411 million and an EBITDA loss of £56 million.

Narendran said the UK market continued to face challenges from elevated imports and inventory build-up across parts of the value chain.

For the first half of FY27, consolidated revenue stood at ₹1,26,231 crore, while EBITDA reached ₹20,035 crore, up 21% year-on-year.

Tata Steel spent ₹3,280 crore on capital expenditure during the September quarter, taking the first-half outlay to ₹6,860 crore. Key projects include the 4.8 million tonnes per annum expansion at Neelachal Ispat Nigam and downstream expansion projects in pickling, galvanising and tinplate.

Net debt stood at ₹91,423 crore at the end of September, with net debt-to-EBITDA at 2.4 times.

Ahead of the earnings announcement, Tata Steel shares closed at ₹186 on the BSE on Friday, November 6, up 2.2%.