Tata Steel Ltd’s net profit beat Street estimates in the September quarter (Q2FY27), aided by strong demand and cost-saving measures.
The Mumbai-headquartered steelmaker reported an 18% year-on-year (y-o-y) increase in consolidated net profit to ₹3,666.41 crore in Q2FY27, according to an exchange filing on Saturday. The company beat Bloomberg’s consensus estimate of ₹3,253.7 crore based on a poll of 12 analysts.
The company also announced that Noel Naval Tata will retire as the non-executive, non-independent director and vice chairman of the board, effective close of business hours on 11 November. It is yet to announce a new vice chairman.
India’s second largest steelmaker by capacity delivered cost savings of only ₹1,800 crore in the first half of FY27, against its full-year target of ₹7,000 crore, as disruptions across its operations delayed the benefits of its cost-cutting programme.
“The crisis in West Asia, the planned shutdown in India, the direct sheet mill outage in the Netherlands and the unfortunate fire in Tata Steel UK has distorted some of the cost takeout profile. As a result, the benefits of our cost transformation were not fully visible on the reported numbers,” executive director and chief financial officer Koushik Chatterjee said during the company’s September-quarter earnings call on Saturday. However, Chatterjee said that the guidance remains unchanged and that “the program is generally weighed on the second half.”
Tata Steel had delivered cost savings of around ₹11,000 crore last financial year.
Consolidated revenue from operations rose 12% y-o-y to ₹65,436.24 crore, while earnings before interest, tax, depreciation and amortization (Ebitda) increased 17% to ₹10,665 crore. Tata Steel’s domestic crude steel production and sales rose to 6.18 million tonnes and 5.98 mt, respectively, from 5.64 mt and 5.55 mt.
“Combination of industry tailwinds, company-specific cost initiatives, and iron ore monetisation led to strong earnings,” said Ritesh Shah, joint head of research, analyst – materials, Investec India.
The performance of Tata Steel’s European operations remained uneven. In the Netherlands, the restart of the Direct Sheet Plant (DSP) in August helped improve operational performance and product mix. The facility, with an annual processing capacity of around 1.4 million tonnes, had remained shut for most of the first quarter because of regulatory issues.
The Netherlands business reported a revenue of €2,840 million in September quarter, up from €1,551 million in the same quarter last year and an Ebitda of €72 million against €92 million.
Tata Steel outlook
However, its long-term outlook remains dependent on regulatory clarity and the economics of its proposed decarbonisation transition. Tata Steel, the Dutch government and the Province of North Holland have extended their joint letter of intent by five months to March 2027 to resolve issues concerning the proposed closure of coke and gas plants, steel slag management, energy affordability and the investment framework.
The UK business, meanwhile, continues to face weak demand and elevated imports. Sales stood at around 400,000 tonnes in the September quarter, below the company’s desired level of 500,000-600,000 tonnes a quarter. Steel inventories in the UK had climbed to around 865,000 tonnes by September, nearly 60% above normal levels, following a surge in imports and an exception from quotas for orders booked before 14 March 2026. UK’s exports to the EU are now subject to restrictions creating a further constraint on market access, Narendran said.
Although UK steel prices and spreads have improved, lower volumes are hurting profitability because of the business’s high fixed-cost base. Tata Steel has already removed nearly £400 million in fixed costs from the UK operations. In the UK, Ebitda loss narrowed to £57 million from £66 million in Q2FY26.
“The prices are good, the spreads are good, but the volumes are not good,” Narendran said, adding that the company expects the UK business to approach breakeven in the March quarter as excess inventories gradually clear.
The UK still remains a work in progress with break- even remaining elusive, said the Investec analyst. Even for the electric arc furnace, we await clarity on its cost curve positioning, which will determine its profitability, said Shah.
The steelmaker is replacing its blast furnaces with an electric arc furnace (EAF) at Port Talbot under an agreement with the UK government with the commissioning of the EAF project to be starting in FY29.
Going forward, Tata Steel expects improved steel realisations across geographies in the December quarter. In India, realisations are expected to increase by ₹3,500-3,600 per tonne sequentially.
Coking coal costs are expected to increase by around $15 per tonne in India and the Netherlands in the December quarter compared with the September quarter. The Netherlands is expected to benefit from a $5-per-tonne reduction in iron ore consumption costs.
Management expects the second half of FY27 to be stronger than the first, supported by higher volumes, improved realisations and seasonally stronger demand.
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