Tata Steel Q3 FY26: Record India Volumes Drive Performance

Introduction: India Operations Shine

Tata Steel Limited announced a robust performance for the third quarter of fiscal year 2026, ending December 31, 2025. The results, declared on February 6, 2026, were headlined by a landmark achievement in its domestic operations, which posted their highest-ever quarterly production and delivery volumes. This strong showing in India provided a significant buffer against persistent headwinds in the global steel market and subdued performance in the company's European business, underscoring the strategic importance of its home market.

Record-Breaking Performance in India

Tata Steel's India operations were the standout performer in Q3 FY26. The company achieved its highest-ever quarterly crude steel production, reaching 6.34 million tonnes, which marks a 12% increase both year-on-year (YoY) and quarter-on-quarter (QoQ). This surge in production was primarily driven by enhanced output from its key plants in Jamshedpur and Kalinganagar.

This increased production translated directly into record sales. For the first time, quarterly deliveries from India surpassed the 6 million tonne milestone, totaling 6.04 million tonnes. This represents a significant 14% growth YoY and a 9% increase QoQ. The strong domestic demand, particularly from the automotive and construction sectors, was a key catalyst for this growth. The 'Automotive & Special Products' segment, for instance, achieved its best-ever quarterly sales of approximately 0.9 million tonnes, a 20% YoY increase.

For the nine months ending in December 2025, India's crude steel production grew by 6% YoY to 17.2 million tonnes, while deliveries rose by 6% to 16.3 million tonnes. This consistent volume growth helped the India business deliver a strong EBITDA margin of 24% for the quarter.

Consolidated Financial Health

On a consolidated basis, Tata Steel demonstrated financial resilience. For the nine months of FY26, the company's consolidated EBITDA stood at ₹24,894 crore, a 31% increase YoY, with the corresponding margin expanding by 300 basis points to 15%. Operating cash flows before capital expenditure for the third quarter were healthy at ₹10,345 crore.

The company also made progress in strengthening its balance sheet. Consolidated net debt was reduced to ₹81,834 crore. Tata Steel maintained a strong group liquidity position of ₹44,062 crore, which includes cash and cash equivalents of ₹10,765 crore, providing ample flexibility for future investments and operations.

European Operations Face Headwinds

In contrast to the strong performance in India, Tata Steel's European operations continued to face a challenging environment. Volumes in both the United Kingdom and the Netherlands moderated on a sequential basis. The UK business was particularly affected by subdued market demand and slower-than-expected materialization of supportive policy interventions.

In the Netherlands, liquid steel production was 1.68 million tonnes with deliveries at 1.40 million tonnes. Despite the challenging market, the Netherlands operations managed to deliver a positive EBITDA of €55 million for the quarter.

Management Commentary and Outlook

CEO & MD, T V Narendran, acknowledged the difficult global operating environment, citing geopolitical shifts, tariffs, and a surge in finished steel exports from China, which reached a peak of 119 million tons. He stated, "Against this backdrop, Tata Steel delivered a strong performance in this quarter, with India crude steel production rising 12% while deliveries grew faster at 14% YoY, surpassing the 6 million tons mark in a quarter for the first time."

Looking ahead to Q4 FY26, the management has provided an upbeat guidance. The company expects both EBITDA and sales volumes to improve compared to Q3. Specifically, volumes are projected to be higher by approximately 0.5 million tonnes. Management also anticipates better steel prices in both India and Europe, driven by cost initiatives and capacity ramp-ups.

Key Financial and Operational Metrics (Q3 FY26)

Strategic Priorities and Expansion

Tata Steel remains focused on its long-term strategic goals. In India, the priority is to continue volume growth through capacity expansion at its Kalinganagar and Meramandali sites. The company is also investing in downstream facilities, such as cold rolling mills and galvanizing lines, to enhance its product mix and value proposition. The expansion of NINL (Neelachal Ispat Nigam Ltd) is a key part of its long-products strategy, with work set to begin after environmental clearances are secured.

Market Reaction and Analyst View

Despite the strong operational numbers from India, the market reaction was mixed, with Tata Steel's stock price seeing some pressure following the announcement. However, analysts remain positive on the company's long-term prospects. Morgan Stanley, for instance, maintained an 'Overweight' rating on the stock with a price target of ₹200, citing the sustained momentum of the Indian business as a key driver.

Conclusion

Tata Steel's Q3 FY26 results paint a clear picture of a company leveraging its domestic strength to navigate global uncertainties. The record-setting performance of its India operations has solidified its market leadership and provided a strong financial cushion. While challenges in Europe persist, the company's positive outlook for the final quarter, coupled with its strategic focus on expansion and debt reduction, positions it well for sustained growth.