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Stock Falls Despite Strong Results
Tata Steel shares fell 5.4% during intraday trading on Monday, reacting to the company's fourth-quarter financial results. Analysts cited ongoing uncertainties about European price swings and environmental regulations as reasons for investor caution, even as the company reported strong overall results.
Q4 Financials Show Robust Growth
The company's consolidated revenue rose 12.5% year-on-year to ₹63,270 crore for Q4FY26. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) jumped 47% to ₹9,953 crore, reaching a 15-year high EBITDA margin of 15.5%. These results were boosted by better steel prices in India and Europe, along with cost-saving efforts. Consolidated profit after tax (PAT) increased significantly by 124% to ₹2,925.7 crore.
India Operations Lead, Europe Recovers
Tata Steel's operations in India performed strongly, with standalone revenue at ₹38,654 crore and EBITDA of ₹9,841 crore. India deliveries grew to 6.19 million tonnes, fueled by solid domestic demand and the expansion of the Kalinganagar plant. Meanwhile, European operations showed a significant turnaround, with combined EBITDA turning positive at ₹32 crore, a sharp improvement from a ₹750 crore loss in the prior year.
Analysts Remain Bullish on Tata Steel
Brokerage firms largely kept their positive ratings on Tata Steel, despite the intraday stock drop. Emkay Global Financial Services reaffirmed a 'Buy' with a ₹230 target. HDFC Securities issued a 'Buy' rating and a ₹250 target, while also increasing its FY27/28 EBITDA estimates. Motilal Oswal Financial Services maintained its 'Buy' rating and ₹250 target.
Growth Drivers for the Year Ahead
Looking ahead, management projects incremental volume growth of about 2 million tonnes in FY27. This is expected from the Kalinganagar plant ramp-up and the Ludhiana electric arc furnace project. The company also foresees better steel prices globally in Q1 FY27, due to favorable trends and updated contracts.