Tata Steel Ltd — summary of earnings call

by

Tata Steel Limited
Q4 FY25
Call date · May 13, 2025

1 · Management Commentary

Key Positives

  • Achieved highest ever crude steel production of ~21.7 million tons and deliveries of ~20.9 million tons for FY25.
  • India operations maintained near 100% capacity utilization (ex-Kalinganagar) and delivered strong growth in branded products (Tata Tiscon volumes up 19% YoY, record sales in Tata Astrum and Tata Steelium).
  • Commissioning of India’s largest blast furnace at Kalinganagar and successful ramp-up of new facilities.
  • Netherlands operations delivered a turnaround: crude steel production at 6.75 million tons (near capacity), deliveries up 17% YoY, and positive EBITDA (€90 million vs. -€426 million in FY24).
  • Structural cost takeout of Rs. 6,600 crores in FY25; operating cash flows after interest up 37% YoY to Rs. 17,700 crores.
  • NINL achieved Rs. 1,000 crore EBITDA and 19% margin in its first full year post-acquisition.

Key Negatives

  • UK deliveries declined YoY to 2.5 million tons; UK operations posted an EBITDA loss of £385 million for FY25.
  • Steel prices in UK remain 8% below last year due to import pressures and subdued demand.
  • Netherlands and UK continue to face high regulatory and carbon costs; cost takeouts not fully visible in P&L due to adverse market conditions.
  • Net debt remains elevated at Rs. 82,579 crores.

Forward Guidance

  • Capex of ~Rs. 15,000 crores planned for FY26, ~75% allocated to India (Kalinganagar completion, Ludhiana EAF, downstream projects).
  • Volume guidance: 1.5 million tons additional deliveries in FY26, mainly from India.
  • Neelachal (NINL) expansion to 9.5 MTPA is the next major project; Kalinganagar and Bhushan expansions to follow.
  • Netherlands: €500 million cost savings targeted in FY26; UK: further fixed cost reduction to £540 million.
  • UK EAF project to commence site activities by July; Netherlands in advanced talks with government for decarbonization funding.
  • Continued focus on cost takeouts (Rs. 11,500 crores targeted in FY26), digitalization, and product mix improvement.
  • No material impact expected from recent US-UK trade deal; safeguard duties in India to support domestic pricing.

2 · Q&A Highlights

Q 1 (Composite): How are steel prices and spreads evolving in India and Europe, and what is the outlook for the next quarter?
A (Management):
• India prices expected to be ~Rs. 3,000/ton higher QoQ; Europe up €20–30/ton.
• Spot price impact limited to 30–40% of volumes in Netherlands/UK; annual contracts provide stability.
• Coking coal consumption cost to be ~$10/ton lower QoQ; iron ore cost in Netherlands ~$10/ton higher.

Q 2 (Composite): What is the rationale and impact of the $2.5 billion infusion into Europe?
A (Management):
• Not new investment; rebalancing debt from overseas to India to reduce currency risk and post-tax cost.
• Only a small portion relates to UK EAF project; Netherlands expected to be net debt-free soon.

Q 3 (Composite): Details and sustainability of cost takeout programs across geographies?
A (Management):
• FY25: Rs. 6,600 crores cost takeout; FY26 target: Rs. 11,500 crores (India: Rs. 4,000 crores, UK: £220 million, Netherlands: €500 million).
• India focus: operating KPIs, procurement, digitalization, vendor development, employee productivity.
• Europe: cost savings offset by inflation, energy, and CO₂ costs; improvements more visible as market stabilizes.

Q 4 (Composite): Volume and capex guidance for FY26 and progress on expansion projects?
A (Management):
• FY26: 1.5 million tons additional deliveries, mainly from India; Ludhiana EAF to be commissioned by year-end.
• Capex: Rs. 15,000 crores, focused on Kalinganagar, Ludhiana, and downstream; Neelachal expansion to 9.5 MTPA next in pipeline.

Q 5 (Composite): Impact of global trade/tariff developments and safeguard duties on Tata Steel’s business?
A (Management):
• Safeguard duties in India and refined quotas in Europe support domestic pricing.
• US-UK tariff elimination positive but limited direct impact; larger benefit for automotive customers.
• Chinese exports remain a concern; company will seek further government support if imports surge.

Q 6 (Composite): Tata Tiscon and branded retail business performance and strategy?
A (Management):
• Tata Tiscon volumes at 2.4 million tons (+19% YoY); retail market share at 14%.
• Expansion enabled by Neelachal acquisition and upcoming Ludhiana plant; focus on local supply and scrap-based production.

Q 7 (Composite): Is India at risk of steel overcapacity by 2030?
A (Management):
• Unlikely, given slow pace of greenfield capacity addition and strong domestic demand growth; India will remain a net consumer.

Q 8 (Composite): Deleveraging plans and interest cost trajectory?
A (Management):
• Net debt reduced by Rs. 6,000+ crores in last six months; continued deleveraging targeted alongside growth capex.
• Net finance cost for FY25 at ~Rs. 6,300 crores (down from FY24); onshoring debt may increase headline cost but lowers post-tax cost.

3 · Other Key Numbers

  • Crude steel production (FY25): ~21.7 million tons (India), 6.75 million tons (Netherlands), 2.5 million tons (UK)
  • Deliveries (FY25): ~20.9 million tons (India), 6.25 million tons (Netherlands), 2.5 million tons (UK)
  • Consolidated revenues (Q4FY25): Rs. 56,218 crores (up 5% QoQ)
  • Consolidated EBITDA (Q4FY25): Rs. 6,762 crores (12% margin)
  • India EBITDA margin (Q4FY25): 21% (Rs. 7,418 crores)
  • Standalone EBITDA (Q4FY25): Rs. 7,105 crores (~Rs. 12,700/ton)
  • NINL EBITDA (Q4FY25): Rs. 323 crores (23% margin); FY25: Rs. 1,000 crores (19% margin)
  • Netherlands EBITDA (FY25): €90 million (vs. -€426 million FY24); Q4: €14 million
  • UK EBITDA (FY25): -£385 million; Q4: -£80 million
  • Structural cost takeout (FY25): Rs. 6,600 crores; FY26 target: Rs. 11,500 crores
  • Operating cash flow after interest (FY25): Rs. 17,700 crores (up 37% YoY)
  • Capex (FY25): Rs. 15,671 crores; FY26 guidance: Rs. 15,000 crores
  • Net debt (Mar 2025): Rs. 82,579 crores (down from Rs. 88,870 crores in Sep 2024)
  • Standalone net worth (Mar 2025): Rs. 1,23,544 crores; consolidated net worth: Rs. 87,770 crores
  • CO₂ cost (Netherlands, FY26): ~€80 million/year
  • Tata Tiscon GMV (FY25): Rs. 3,500 crores; unique customers served: >1 lakh
  • Branded Products & Retail volumes (FY25): ~7 million tons
  • Combi mill (Jamshedpur): 0.5 MTPA; commissioning underway
  • Ludhiana EAF: Civil work in progress; commissioning expected in next 12 months
  • UK fixed cost base: Reduced by £230 million YoY; target £540 million in FY26
  • Government support for UK EAF: £500 million secured; £35 million spent in FY25
  • Accounting change (OCI adjustment): Rs. 24,829 crores (Q4), Rs. 23,606 crores (FY25) – non-cash, standalone only

All figures as stated in the call; undisclosed numbers marked as Not disclosed.

Leave a Comment