Tata Steel's stock tumbled 5% in morning trade on May 18, even as the company reported a more than two-fold jump in its consolidated net profit for the fourth quarter of fiscal 2025-26. The profit surged to Rs 2,965 crore, compared to Rs 1,207 crore in the same quarter last year, driven by strong operational performance and cost-saving measures.
Financial Performance Highlights
The steel giant's revenue from operations rose 8% year-on-year to Rs 58,688 crore, up from Rs 54,345 crore in Q4 FY25. Earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at Rs 8,200 crore, with margins improving to 14% from 12.5% in the corresponding period last year. The company attributed the growth to higher domestic steel prices, robust demand from the automotive and infrastructure sectors, and lower input costs.
Segment-Wise Performance
Tata Steel's India business recorded a 10% increase in sales volume, reaching 4.8 million tonnes. The European operations also showed improvement, with EBITDA turning positive at Rs 150 crore, compared to a loss of Rs 200 crore in Q4 FY25. The company's net debt reduced by Rs 3,500 crore during the quarter, bringing it down to Rs 65,000 crore.
Market Reaction and Analyst Views
Despite the strong earnings, the stock fell 5% to Rs 155.50 on the BSE, as investors booked profits after a recent rally. The stock had gained nearly 15% in the past month ahead of the results. Analysts noted that while the results were in line with expectations, concerns over global steel demand and rising competition from Chinese exports weighed on sentiment.
"The Q4 performance was strong, but the market is cautious about the near-term outlook due to potential headwinds from global trade tensions and commodity price volatility," said an analyst at a domestic brokerage firm.
Outlook and Guidance
Tata Steel's management expressed confidence in sustaining the momentum, citing healthy order books and ongoing capacity expansion projects. The company plans to increase its annual steelmaking capacity to 40 million tonnes by 2030 from the current 34 million tonnes. It also aims to reduce net debt further to Rs 50,000 crore by the end of FY27.
The board has recommended a final dividend of Rs 3 per share for FY26, subject to shareholder approval. The record date for the dividend is set for June 10, 2026.
