Q4 results: Tata Steel profit jumps on cost declines, higher volumes, but pricing hurts topline

On May 12, the stock of the company rose 6.16 percent to close at Rs 151.55 on BSE.

Tata Steel on May 10 reported a 117 percent jump in its consolidated profit at Rs 1,200.88 crore in the quarter ending March 31, 2025, compared to Rs 554.56 crore in the same period of the previous financial year, as the company reported declines in its input costs, especially for coking coal, as well as improved sale volumes. The profit stood at Rs 295.49 crore in the third quarter of FY25.

However, despite lower material costs and sale volume improvements in both India and overseas markets, sluggish steel pricing hit the Tata Group flagship. The company’s consolidated revenue fell 4.2 percent to Rs 56,218.11 crore in the reported quarter compared to Rs 58,687.31 crore in the year-ago period, the filing said.

Tata Steel had reported a revenue from operations of Rs 53,648.3 crore in the December quarter.

The company reported that its sales volumes for the reporting quarter were 8.33 million tonne (MT), against 7.98 MT in the year-ago period, and 7.72 MT in the October-December 2024 quarter.

Due to lower realisations owing to weak steel prices, Tata Steel's consolidated earnings before interest, taxes, depreciation, and amortisation (EBITDA) per tonne on a reported basis declined to Rs 8,121, against Rs 8,311 in the year-ago period. On a sequential basis, however, the EBITDA per tonne for the quarter represented an improvement, due to incremental price hikes at the beginning of the quarter, and better sale volumes during Q4FY25.

Operating EBITDA margin for the quarter improved to 12.03 percent, compared to 11.30 percent a year ago, the company reported.

On a consolidated basis, the company's EBITDA improved year-on-year in Q4 to Rs 6,762 crore, against Rs 6,631 crore in the same period last year. For the December quarter, the company's EBITDA was Rs 5,994 crore.

Despite continuing to be elevated, Tata Steel managed to reduce its net debt at the end of March 31, 2025 to Rs 82,579 crore, against Rs 85,800 crore at the end of the December quarter. Against a guidance of Rs 17,000 crore at the beginning of FY25, Tata Steel spent Rs 15,671 crore by way of capital expenditure for the full financial year.

India Operations

Tata Steel's largest market and its home base continued to largely deliver for the company, driven by strong demand across all sectors, such as automobiles, infrastructure, and others, including growth in its downstream products segment, in which the company has been eager to increase its market share.

Most of the company's improvements in its India business was on a sequential basis, as the festive season in the quarter prior gave way to better seasonality in demand, the company said in its investor presentation. Sequentially, revenue in its standalone operations, largely representing its India business, grew by 5 percent, owing to better demand, and a "marginal increase" in realisations.

Despite that, both EBITDA and EBITDA per tonne for the standalone business were lower both year-on-year and sequentially due to the continued weakness in steel prices.

Netherlands and UK

For the Netherlands operations, Tata Steel swung back to profitability on an EBITDA basis, reporting a positive EBITDA of Rs 124 crore, after reporting EBITDA losses both in the year-ago period, and for the October-December quarter. This was driven by an increase in sale volumes to 1.75 MT, higher than 1.43 MT reported in the corresponding quarter last year, and 1.53 MT in the previous quarter.

Raw material costs in the Netherlands declined due to a decrease in the prices of coking coal and iron ore, the company said in its investor presentation. The company has planned to reduce costs further through a combination of layoffs and efficiency measures, even as it has run into resistance from employee unions.

This is besides its ongoing negotiations with the Dutch government for financial support for its refurbishment project at its large IJMuiden works. The company described its nature of talks with the government as "intense".

"The discussion with the Government of Netherlands on the integrated decarbonisation and environmental measures project continues to be intense and we are also engaged with the provincial and environmental authorities on the above," said Koushik Chatterjee, executive director and chief financial officer at Tata Steel.

Across to the United Kingdom, while production has now shut down at its Port Talbot steelmaking facility owing to its green transformation process towards electric arc furnaces, sale volumes still increased sequentially at 630,000 tonne, even as its EBITDA loss widened year-on-year. Tata Steel continues to manufacture downstream steel products in the UK, with crude steel needs met by the company's Dutch and Indian operations.

Chatterjee said in a statement that the company has received planning permissions and has handed out key contracts to equipment makers to build electric arc furnaces in the UK, with construction set to start in July.

With Tata Steel now entering the crucial construction phase of its transformation of UK operations, the company decided to infuse more than Rs 21,000 crore to its holding company for its British and Dutch operations.

In its board meeting, the company also recommended a dividend of Rs 3.60 per share for FY25.

On May 12, the stock of the company rose 6.16 percent to close at Rs 151.55 on BSE.