Tata Steel Shares Drop 2.75% in Early Trade Following July-September Financial Results

Tata Steel shares declined in morning trade following the release of its July-September quarter results, despite reporting an 18 percent year-on-year increase in consolidated EBITDA. Brokerages remain divided on the stock's near-term recovery path amid ongoing challenges in international operations.

Shares of Tata Steel faced heavy selling pressure in Monday morning trade, dropping 2.75 per cent to ₹184.97 by mid-session after opening at ₹192.50. The decline followed the announcement of the company’s financial results for the July-September quarter over the weekend.

Sell orders accounted for 71.18 per cent of the total order flow compared to 28.82 per cent buy interest. More than 2.45 crore shares changed hands, representing a total value of ₹459.92 crore by 11.33 am. The stock touched a session low of ₹184.58, which is below its previous close of ₹190.20, and remains approximately 17.5 per cent lower than its 52-week high of ₹224.40 recorded in May.

The market reaction occurred despite Tata Steel reporting a broadly in-line set of financial numbers for the second quarter. Consolidated EBITDA rose 18 per cent year-on-year and 14 per cent quarter-on-quarter to ₹10,665 crore, supported by the India operations which delivered a 25 per cent EBITDA margin.

Performance across international segments presented a mixed picture. Tata Steel Netherlands swung to an EBITDA of ₹790 crore from ₹39 crore in the preceding quarter, aided by the restart of the Direct Sheet Plant in August. However, UK operations continued to face headwinds, posting an EBITDA loss of ₹719 crore as deliveries fell 22 per cent quarter-on-quarter due to weak demand and supply-chain inventory build-up. Net profit for the company rose 18 per cent on better realisations, while net debt stood at ₹91,423 crore, resulting in a net debt-to-EBITDA ratio of 2.4x.

Financial brokerages are split regarding the company's near-term stock performance. Elara Securities maintained a Buy rating with a target of ₹235, pointing to guided India realisation improvements of ₹3,500-3,600 per tonne in the third quarter. CLSA retained an Outperform rating with a ₹225 target, while Nuvama and Kotak upgraded their stances to Buy and Add with targets of ₹219 and ₹200 respectively. Motilal Oswal maintained a Buy call with a target of ₹220. Conversely, Goldman Sachs kept a Neutral view with a target of ₹215, citing unresolved European regulatory uncertainties and challenging market conditions.

Looking ahead, management has guided for a stronger second half of the financial year. This outlook is anchored by anticipated higher domestic volumes, rising steel realisations, and the Netherlands plant targeting quarterly deliveries of around 1.7 million tonnes. The UK operations are expected to approach breakeven by the fourth quarter of fiscal year 2027.

"Tata Steel's recent market movement highlights how investor sentiment can diverge from core operational metrics. While domestic operations and the Netherlands plant show positive momentum, ongoing challenges in the UK segment and broader macroeconomic uncertainties continue to weigh on near-term valuations. For large-cap manufacturers, sustainable recovery depends heavily on balancing domestic growth with international restructuring and debt management over the coming quarters." — Dr. Shishir Gupta, Founder & CEO, StartupLanes