Tata Steel (TATA IN) – Q2FY26 Result Update – Stellar TSI/TSN; UK remains a drag – Accumulate
Published on 13 Nov 2025
Tata Steel (TATA) reported robust operating performance in Q2FY26 aided by India (TSI) and Netherlands (TSN). TSI EBITDA grew 31% YoY despite 4% QoQ decline in blended realisation amid falling steel prices. TSI volumes grew 9% YoY while leaner coal mix and cost efficiency measures delivered EBITDA/t of Rs14,681 (PLe Rs14,123). TSE delivered flattish sequential operating performance supported by Netherlands while UK (TSUK) losses widened on weak pricing. Going forward, weak pricing in domestic market will get negated by incremental volumes from KPO-II. TSN would be impacted by weak pricing while UK market has worsened due to rising imports which may delay TSUK breakeven. Tailwinds from structural cost transformation initiatives undertaken are evident (Rs55bn in H1) and expected to continue.
Key variables to watch out for: a) notification on safeguard duty, b) EC and commencement of NINL expansion, c) ramping up of KPO-II & Ludhiana EAF, d) development on CBAM & TSUK breakeven. We expect EBITDA CAGR of 23% over FY25-28E on the back of KPO volume ramp-up, expected recovery in domestic pricing and TSE turnaround. At CMP, the stock is trading at 6.5x/5.8x EV of FY27/28E EBITDA. We maintain ‘Accumulate’ rating with TP of Rs196 valuing at 7x EV of Sep’27E TSI EBITDA.
