Tata Steel (TATASTEEL) Q2 24/25 earnings summary

Executive summary

• Global steel markets remain challenging due to subdued economic activity, inflation, and high Chinese exports, impacting regional prices and realisations.

• India operations saw strong demand and production growth, with a 6% YoY increase in domestic deliveries and robust performance in auto and retail segments.

• Major progress in Kalinganagar expansion, including commissioning of a 5 MTPA blast furnace and new cold rolling mill, expected to improve cost and product mix.

• U.K. operations are in transition, with both blast furnaces decommissioned and a green steel project underway, supported by a GBP 500 million government grant.

• Multiple mergers and amalgamations, including ISWP, AEL, and BPPL, were completed and accounted for retrospectively.

Financial highlights

• Consolidated Q2 FY25 revenue: INR 53,905 crores; EBITDA: INR 6,224 crores; EBITDA margin: 12%.

• Standalone Q2 EBITDA: INR 6,734 crores; EBITDA margin: 21%; per-ton EBITDA: INR 13,176.

• Net profit after tax for Q2 FY25: INR 759 crores; net debt: INR 88,817 crores as of September 2024.

• Working capital release in Q2: INR 850 crores (inventory) and INR 1,000 crores (debtors).

• Tata Steel UK posted negative EBITDA of INR 1,589 crores, impacted by blast furnace closures and subdued demand.

Outlook and guidance

• Focus on scaling up Indian operations to target 40 MTPA crude steel capacity and capitalize on domestic growth.

• U.K. fixed cost reduction of GBP 100 per ton targeted over next two quarters; breakeven expected by June 2025, assuming current market conditions.

• Committed to net zero emissions by 2045, with interim targets of 35-40% emission reduction by 2030.

• Netherlands CapEx for decarbonization not expected in next 12 months; U.K. CapEx to ramp up gradually.

• FY26 expected to be a CapEx-light year, with focus on deleveraging and higher India production.