Tata Steel expects investment in expanding production capacity in India to drive more sales volume in the coming quarters, which will still hurt the company’s profitability as coking coal prices rise and raw material costs rise.
Tata Steel's Managing Director and CEO T.V. Narendran said that he is optimistic about demand in India but that margins will be under pressure due to higher input costs.
Capacity Expansion to Boost Volumes
Narendran said that the company's investments in India are starting to yield results.
He said Tata Steel expects to achieve higher steel volumes as recently added capacity becomes fully operational and strengthens its position in the domestic market.
From the company’s perspective, long-term growth strategy is about growing production and operational efficiency, he said.
Coal Prices Continue to Hurt Margins
Although demand is seeing a positive trend, Narendran said coking coal prices are expected to stay high, and thus operating margins will be under pressure for the company.
Even though the Middle East conflict has not affected supply chains, he said, it has significantly increased logistics and input costs.
Narendran said: “The Middle East war has impacted costs, not supplies."
According to the company, higher costs have resulted in an additional burden of around ₹800 crore on Tata Steel’s India business during the June quarter.
Diversifying Raw Material Sources
Tata Steel wants to diversify its sourcing strategy for supply chain risk mitigation and cost control to reduce the risk and costs.
The company intends to expand the number of countries from which it imports pyroxenite, one of the key raw materials used in steelmaking.
This strategy is aimed at improving supply security and reducing dependence on a small number of suppliers.
Positive Outlook for International Operations
Narendran also expressed confidence about Tata Steel’s Netherlands business, where the company expects better market conditions.
He added that Tata Steel will continue to focus on:
Strengthening its core businesses
Streamlining value chains
Expanding operations at Neelachal Ispat Nigam Ltd. (NINL)
Maintaining a balanced mix of upstream and downstream operations.
The company also intends to keep its debt-to-equity ratio between 4.3 and 4.5, in line with financial discipline.
June Quarter Financial Performance
For the quarter ended June 2026, Tata Steel recorded a 21 per cent sequential decline in consolidated net profit to ₹2,318 crore.
The reason for this decline was a one-time loss of ₹345 crore, and it hurt overall earnings.
Key Financial Highlights
Q1 FY27 QoQ Change
Net Profit ₹2,318 crore -21%
Revenue ₹60,794 crore -3.9%
EBITDA ₹9,264 crore -5.7%
Despite the sequential drop in earnings, both revenue and EBITDA were above expectations, indicating that in a cost environment where costs are high, we still had operational capability.
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