Summary
Tata Steel Limited - Q3 FY2026 Earnings Call Summary Thursday, February 6, 2026 5:00 PM
Event Participants
Executives 3 Koushik Chatterjee (ED & CFO), Samita Shah (VP Corporate Finance, Treasury, & Risk Management), T V Narendran (CEO & MD)
Analysts 11 Ashish Kejriwal, Indrajit Agarwal, Pallav Agarwal, Pinakin Parekh, Prateek Singh, Rajesh Majumdar, Satyadeep Jain, Siddharth Gadekar, Sumangal Nevatia, Vibhav Zutshi, Vikash Singh
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| India Deliveries | 6.0 million tons | First time exceeding 6MT in a quarter; volumes rose in line with production ramp-up. |
| Consolidated Revenue | ₹57,002 crores | Supported by record India volumes despite lower steel realizations globally. |
| Consolidated EBITDA | ₹8,309 crores | +31% YoY for 9MFY26; 3Q margin at 15% aided by ₹3,000 cr cost transformation benefits. |
| India EBITDA | ₹7,940 crores | +12% YoY for 9MFY26; 23-24% margin maintained near 10-year average levels. |
| NINL EBITDA | ₹350 crores | +35% QoQ; reflecting a healthy EBITDA margin of 22%. |
| UK EBITDA Loss | -£63 million | Broadly stable QoQ; burdened by weak demand and high import quotas in the UK. |
| Netherlands EBITDA | €55 million | Measured at €39/ton; impacted by 50% US tariffs and carbon emission costs. |
| Net Debt | ₹81,834 crores | -₹5,200 crores QoQ; reduction driven by strong operating cash flows and working capital management. |
| Net Debt / EBITDA | 2.6x | Improved from previous quarters; remains well within the management target of <3.0x. |
Geographic & Segment Commentary
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India: Achieved record quarterly crude steel production of 6.34 million tons (+12% YoY). Automotive and Special Products saw best-ever volumes due to rapid OEM approvals from Kalinganagar. The retail segment (Tata Tiscon) and MSME brands (Tata Steelium) also posted record/strong growth, while the tubes business added 0.3 MTPA capacity.
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Europe (Netherlands): Liquid steel production was stable at 1.7 million tons. Performance was weighed down by a 50% US tariff on packaging/auto exports (total impact ~€50M in 9MFY26) and emission rights costs (~€150M in 9MFY26). Management expects margin expansion in 4Q due to €21/ton cost improvements and higher volumes.
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Europe (UK): Deliveries fell to 0.5 million tons due to subdued demand and a policy gap regarding import safeguards vs. the EU. Management has reduced fixed costs by nearly £500M over two years. The transition to a 3 MTPA Electric Arc Furnace (EAF) is progressing with major demolition completed, though power infrastructure access remains a critical path.
Company-Specific & Strategic Commentary
- Cost Transformation Program: Realized ₹8,600 crores in savings over 9MFY26, offsetting a ₹7,400 crore adverse impact from lower steel realizations. Savings were driven by coal blend optimization in Netherlands (₹1,600 cr in 3Q) and logistics/spares optimization in India.
- Kalinganagar Expansion: Downstream facilities including the Cold Rolling Mill (CRM) complex and galvanizing lines are ramping up, transitioning the mix toward higher-margin auto and retail products.
- Digital Sales: The omnichannel model (Aashiyana and DigECA) achieved a Gross Merchandise Value of ₹2,380 crores, representing 68% YoY growth.
- Sustainable Technology: Progressing with the “HIsarna” pilot project in Jamshedpur to allow flexible raw material use and easier carbon capture; collaboration with Nucor is ongoing.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| India Realizations | +₹2,300/ton (Q4 FY26) | Driven by spot price recovery in late Dec/Jan and improved product mix from Kalinganagar. |
| Coking Coal Cost | +$15/ton (Q4 FY26) | Consumption cost increase due to price lags in transit and inventory cycles. |
| India Volume | +0.5 million tons (Q4 FY26) | Driven by full-quarter ramp-up of new capacities and lack of planned maintenance shutdowns. |
| NINL Expansion | FY2029 Commissioning | Working toward Final Investment Decision (FID) in 2 months; execution timeline 35-40 months post-EC. |
| EU Pricing | “Move toward US prices” | Management expects CBAM and reduced import quotas (from 30MT to 15MT) to decouple EU prices from Asian floors. |
Risks & Constraints
| Risk | Context |
|---|---|
| Regulatory/Tariffs | 50% US tariffs on Netherlands exports and high carbon costs (€150M YTD) significantly compress EU margins. Management monitors CBAM rollout to mitigate these. |
| UK Policy Delay | The expiration of UK steel safeguards in June 2026 without a revised framework threatens domestic competitiveness against cheap imports. Neutralizing losses depends on a ~£100/t spread expansion. |
| Raw Material Costs | Volatile coking coal prices (expected up $22/t on purchase basis in 4Q) could dampen the benefits of rising steel realizations in India. |
| 2030 Mine Expiry | Transitioning away from current iron ore mine leases by 2030 in India. Management is mitigating this via downstream shifts, recycling models, and potential MDO (Mine Developer and Operator) structures. |
Q&A Highlights
Pricing Dynamics
- Question: How sustainable are the recent European price hikes to €700/t? (Vibhav Zutshi)
- Answer: EU prices are moving away from Asian levels toward US levels. This is driven by the CBAM rollout and a mandated reduction in import quotas from 30 million tons to 15 million tons by June-July (T V Narendran).
Capacity & Debt
- Question: How will debt be managed as capex accelerates for NINL and Meramandali? (Vibhav Zutshi)
- Answer: We aim to stay around 2.6x to 3.0x Net Debt/EBITDA. Growth pace will be calibrated to stay within this balance sheet range even during mid-cycles (Koushik Chatterjee).
UK Strategy
- Question: Why continue UK capex while facing relentless EBITDA losses? (Pinakin Parekh)
- Answer: Delaying the EAF transition only prolongs the bleed. The EAF offers a structural shift to a lower-cost, more stable operating model compared to buying expensive substrate globally (Koushik Chatterjee).
India Realizations
- Question: Was the December quarter the bottom for India margins? (Pinakin Parekh)
- Answer: Flat product prices in early 3Q were the lowest in five years. We expect better numbers in 4Q as spot prices have caught up with landed import costs, despite coking coal headwinds (T V Narendran).
Cost & Energy
- Question: What is the status of carbon credits in the Netherlands? (Vikash Singh)
- Answer: While our intensity is 1.6 tCO₂, the CBAM benchmark is 1.37 tCO₂. We will remain a net buyer of credits until the transition to new processes is complete (Koushik Chatterjee).
Key Takeaway
Tata Steel delivered a resilient performance in Q3 FY2026, characterized by record domestic deliveries in India exceeding 6 million tons for the first time. While global steel realizations remained soft, the company successfully offset ₹7,400 crores in revenue headwinds through a disciplined ₹8,600 crore cost transformation program. A significant strategic pivot is underway in Europe, where management expects the definitive phase of CBAM and halving of import quotas to structurally elevate EU steel prices toward US levels by mid-2026. In India, the ramp-up of the Kalinganagar CRM complex is successfully shifting the mix toward high-value automotive segments, which now comprise over 50% of the downstream mix. Despite navigating persistent losses in the UK and new 50% US tariffs on Dutch exports, the company reduced net debt by ₹5,200 crores QoQ to ₹81,834 crores. Looking ahead, management expects Q4 EBITDA expansion driven by a ₹2,300/ton realization uptick in India and higher volumes in the Netherlands.
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