Tata Steel's Q2 FY26: India Shines Amidst Global Headwinds

Tata Steel Limited, a global steel giant, has reported a resilient performance for the second quarter and half-year ended September 30, 2025. Despite a challenging global operating environment marked by tariffs, geopolitical tensions, and elevated steel exports, the company demonstrated strong operational strength and cost discipline. For 2QFY26, Tata Steel reported consolidated revenues of Rs 58,689 crore, with an impressive EBITDA of Rs 9,106 crore, reflecting a significant 22% QoQ and 46% YoY improvement. The EBITDA margin expanded by 145 basis points QoQ and 280 basis points for the half-year, underscoring the effectiveness of its strategic initiatives.

Segmental Performance: India Leads the Charge

The India operations emerged as the primary growth driver, with crude steel production rising 8% QoQ and 7% YoY to 5.65 million tons. This growth was largely fueled by the ongoing ramp-up at Kalinganagar and the successful completion of the G blast furnace relining. Domestic deliveries surged by 20% QoQ, a testament to Tata Steel's robust customer relationships and expansive marketing and sales network. The company's retail brand, Tata Tiscon, grew by 27% QoQ, while Industrial Products & Projects deliveries increased by 22% QoQ, aided by value-accretive segments.

In contrast, the European operations presented a mixed bag. Tata Steel Netherlands reported higher revenues and an improved EBITDA of €92 million, up from €64 million in 1QFY26, demonstrating progress in restoring competitiveness. However, the UK operations continued to face headwinds, with an EBITDA loss of £66 million, widening from £41 million in 1QFY26. This decline was attributed to subdued prices and safeguard quotas exceeding prevalent demand, highlighting the vulnerability of the UK market to cheap imports.

Here's a snapshot of Tata Steel's consolidated financial performance:

Strategic Imperatives: Decarbonisation and Downstream Growth

Tata Steel is actively pursuing a multi-pronged strategy focused on decarbonisation, capacity expansion, and downstream growth. In the UK, the company is committed to reducing 50 million tons of CO2e over a decade through a scrap-based Electric Arc Furnace (EAF) steelmaking project, with supplies scheduled for early 2026. This initiative, backed by £500 million from the UK Government, is expected to significantly improve the UK's cost position and reduce emission intensity.

In the Netherlands, Tata Steel has signed a non-binding Joint Letter of Intent (JLol) with the Dutch government for an integrated health and decarbonisation project. This project aims to reduce annual Scope 1 CO2 emissions by over 42% and transition to low-carbon production, supported by up to €2 billion from the government and EU Innovation Fund. The final investment decision is anticipated next year, following engineering preparedness and regulatory approvals.

India remains a key focus for capacity expansion, with Kalinganagar ramping up to 7-8 million tons per annum and the Ludhiana EAF plant expected to be commissioned in FY2027, adding 0.8 million tons. The company is also expanding its downstream capabilities, including a 2.2 MTPA CRM complex and a commissioned 0.5 MTPA Combi mill for specialty steel. The recent acquisition of the remaining 50% stake in Tata BlueScope Steel Private Limited for up to ₹1,100 crore further strengthens its downstream portfolio and leverages synergies.

Financial Discipline and Digital Leadership

Tata Steel's focus on financial discipline is evident in its successful cost transformation program, which delivered Rs 2,561 crore in savings for the quarter and Rs 5,450 crore for the half-year, achieving 94% compliance with its 1H plan. The company generated approximately Rs 10,000 crore in operating cashflows (after interest, tax, and working capital) during the half-year, with Rs 7,000 crore allocated to capital expenditure and Rs 4,490 crore for dividend payments. Net debt stood at Rs 87,040 crore, with a Net Debt to EBITDA ratio of 3x on a consolidated basis.

Digitally, Tata Steel is embracing advanced technologies to unlock value across its operations. Its e-commerce platforms, Aashiyana and DigECA, have shown remarkable traction, tripling their Gross Merchandise Value YoY. The company is leveraging Generative AI to enhance manufacturing excellence, improve energy efficiency, and boost productivity. These digital initiatives are also modernizing processes for global collaboration and enhancing customer experience through improved complaint resolution and interactions.

Outlook and Conclusion

Despite the ongoing global macroeconomic uncertainties and competitive pressures from elevated Chinese steel exports, Tata Steel has demonstrated strong operational and financial resilience. The company's strategic focus on India's growth, coupled with its ambitious decarbonisation projects in Europe and disciplined capital allocation, positions it well for sustained long-term value creation. Management's transparent communication regarding challenges, particularly in the UK, and its proactive measures to address them, reinforce confidence in its strategic direction. Tata Steel continues to build a future-ready enterprise, balancing growth with sustainability and operational excellence.