Tata Steel Q2FY25 preview: Weak pricing, high costs to weigh on earnings

Tata Steel is bracing for a mixed set of Q2 results as weakening steel prices and high operational costs continue to challenge its domestic and European business, according to brokerage estimates. For Q2FY25, Tata Steel's consolidated revenue is projected at around Rs 52,691 crore, marking a five per cent drop from last year’s Rs 55,682 crore, as per Zee Business estimates. This decline is mainly due to an estimated three per cent reduction in realizations quarter-on-quarter, driven by softer prices in both India and Europe.

EBITDA for the quarter is anticipated to fall by 12-17 per cent sequentially, with estimates from five brokerages pegging it at Rs 4,819 crore. However, on a year-on-year basis, EBITDA is expected to show a 13 percent rise from Rs 4,268 crore last year, leading to a slightly better EBITDA margin of 9.14 percent, up from 7.7 percent. 

European business weighs down margins, with major write-offs expected

Tata Steel’s European operations, particularly in the UK, are expected to incur losses as the company navigates higher restructuring and impairment costs. Last year, the company had a one-time loss of Rs 6,899 crore, including an impairment expense of Rs 2,631 crore for its Port Talbot facility, restructuring costs of Rs 2,425 crore, and an additional Rs 1,187 crore allocated to the British Steel pension scheme. These exceptional items are likely to impact the overall results this quarter as well, with Tata Steel’s UK operations remaining under pressure amid slow demand recovery and increased costs.

Profit after tax (PAT) for Tata Steel is projected at Rs 890 crore, a 27 per cent improvement from Rs 703 crore (adjusted) in the previous year. While the company’s margin gains reflect some operational resilience, continued weakness in the European segment may temper overall profitability for the quarter.