Tata Steel reports Q2 FY25 EBITDA of Rs 6,224 crore, driven by strong India performance

Tata Steel, one of the leading global steel producers, reported consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) of ₹6,224 crores for the July to September 2024 quarter, with a half-yearly EBITDA of ₹13,046 crores. The company’s consolidated revenues for the quarter stood at ₹53,905 crores, marking a strong 25% year-on-year increase. Tata Steel attributes this growth primarily to robust performance in its Indian market, despite global economic pressures and fluctuating steel prices.

India Segment Boosts Performance, Contributing to 21% EBITDA Margin

In a detailed earnings report, Tata Steel highlighted that India remains its strongest market. India’s quarterly revenues reached ₹32,660 crores with an EBITDA of ₹6,912 crores, representing a substantial EBITDA margin of 21%. Crude steel production in India was reported at 5.28 million tons, reflecting a 5% increase year-over-year. The company saw a 6% rise in domestic steel deliveries, significantly contributing to its overall quarterly performance.

The company’s strategic focus on high-end products helped increase automotive deliveries, with Tata Tiscon achieving its best second-quarter deliveries ever, surging by 20% compared to the previous year. CEO T. V. Narendran stated that India’s growing demand for steel, despite pressures from low-cost imports, has reinforced Tata Steel’s domestic operations as a pivotal element in its growth.

UK and Netherlands Operations: Challenges and Shifts Toward Green Steel

While Tata Steel’s Indian operations yielded impressive results, the company’s UK segment faced ongoing challenges, reporting an EBITDA loss of £147 million for the quarter. Following the closure of one of its blast furnaces in Port Talbot, Tata Steel aims to transition to more sustainable, green steelmaking processes. A grant funding agreement with the UK government has been secured to aid this transition, underscoring Tata Steel’s commitment to reducing its carbon footprint.

In the Netherlands, Tata Steel’s revenues reached £1,300 million, with a positive EBITDA of £22 million for the quarter. However, the company noted that softening steel prices impacted profitability. Tata Steel Netherlands is actively involved in pilot projects focused on carbon emission reduction, aligning with the company’s broader sustainability goals.

Investment in Capacity Expansion and Green Technology

Tata Steel remains committed to expanding its production capabilities and investing in sustainable steel production. A major milestone for the company was the recent commissioning of a 5-million-ton-per-annum blast furnace at its Kalinganagar facility in India, set to bolster crude steel capacity to 26.6 MTPA. The company also revealed plans for a 0.85 MTPA Electric Arc Furnace in Ludhiana, further supporting its transition toward greener operations.

Koushik Chatterjee, Tata Steel’s Executive Director and CFO, emphasized the company’s focus on cost optimization, operational improvements, and capital efficiency, stating that their capital expenditure of ₹8,583 crores in the half-year was largely channeled into the India segment. With a net debt of ₹88,817 crores and robust liquidity at ₹26,028 crores, including cash reserves of ₹10,575 crores, Tata Steel maintains a strong financial position to support its growth and sustainability objectives.

Expert Insights on Tata Steel’s Strategic Growth and Future in Green Steel

Industry experts noted that Tata Steel’s diversified operations allow it to weather regional challenges more effectively. With a clear focus on digital transformation and a commitment to environmental goals, Tata Steel stands out in the global steel sector. Sustainability analysts pointed out that the transition to green steel in the UK could set an industry precedent, as the company works to balance profitability with environmental responsibility.

Tata Steel’s ambitious plans to achieve net-zero emissions by 2045 reflect a proactive approach to evolving regulatory pressures and consumer expectations on sustainability. This commitment was recognized globally, with accolades such as the World Economic Forum’s Global Diversity, Equity & Inclusion Lighthouse 2023. Tata Steel continues to be a part of the Dow Jones Sustainability Emerging Markets Index, maintaining a consistent ranking among the top 10 steel producers in sustainability assessments since 2016.