Tata steel stock shines - but are European risks in?

Copyright © HT Digital Streams Limit all rights reserved. Ananya Roy 3 min Read 06 Oct 2025, 01:31 pm is a general view of the Tata Steel Factory in Ijmuiden, the Netherlands. (File Photo: Reuters) Summary rising domestic demand, global supply cuts and strategic extensions position tata steal for growth, even if European operations on margins weigh. Tata Steel Ltd has a broad metal rally, and has been more than four -fold investor wealth over the past five years. Recent winds in the industry pushed the stock to a fresh high of 52 weeks of £ 174.74 on October 3. Optimism around potential US rate cuts, which can weaken the dollar and benefit from commodities, including steel, has a reinforced sentiment. Further support is expected of expected import tariffs in Europe and a prolonged reduction in China’s steel production, which must increase and margins. This comes at a critical time for the steel Major, of which the consolidated ebitda margin in FY25 from 26% was compressed from 26% in FY22 to 12%. While margins dropped to 14% in the June term (Q1FY26), Tata Steel’s European operations still weighed consolidated finance. By contrast, the Q1FY26 -standing Indian business achieved a strong margin of 23.4%. The British segment, which contributed 27.5% of Q1FY26 consolidated income, struggled under high energy costs amid geopolitical tension and stiff competition from cheap imported steel. Soft domestic demand has made security quotas largely ineffective. In his Q1FY26 earnings, Tata Steel noted that Chinese steel was trading at around $ 450/ton, compared to $ 660/ton in Germany and the United Kingdom. Meanwhile, massive decarbonization costs, especially amid an escalated environmental and health issues in the Netherlands, have added fuel. The Netherlands contributed 11.5% of Tata Steel’s Q1FY26 income. Result? After nearly £ 5,000 crore-consolidated loss in FY24, the net debt-to-equity of Tata Steel became faster to more than 0.9x from June from 0.78x in March 2024. However, in the midst of the risk of domestic demand, hope offers hope. Thanks to continued government spending, the sector for infrastructure, construction and capital goods has maintained the domestic demand for steel. Although the overall private Capeex is still slow, select segments such as premium cars, engineering and devices, and solar energy contributed to domestic demand. GST 2.0 must help the question further. Tata Steel’s replacement of Blastoond with Electric Bow Old in the UK will help address the environmental issues. The expected import tariffs in Europe and output reductions in China will help the competition of imports, even if lower energy costs are protecting the margins. While the dumping of cheap Chinese steel household realization also caused harm, the 12% protection duty imposed by India helped the impact. To take advantage of these winds, Tata steals great expansion plans of £ 10,000 crore annually. It is expected to take the capacity of the company from 21.6 million tonnes per year to 40 MTPA by 2030. What is said, Q1FY26 has seen a flat domestic deliveries as a result of a slowdown of the year in the domestic demand of individual home builders, energy and engineering goods. Lower volumes and operating lever eroded more than £ 2,000 crore of the company’s ebitda, even though higher realized and lower costs of ground material were almost £ 2500 consecutive. While cost savings have helped over the past quarter, higher R&D expenses in the United Kingdom and the delayed government’s expenses and regulatory clarity in the Netherlands delay margins in the future. If the domestic car demand and the slowdown of the European Union do not reverse, the demand will not keep up with the rising capacity. Due to subdued operational leverage, it can further thinn up the margins, even if lower are realized of any delays in the production of production by China, which can aggravate matters. Despite Peer JSW Steel Ltd, which has surpassed for the past five years, Tata Steel is trading at an EV/Ebitda multiple of 8.2x, based on FY26 estimates, according to Bloomberg, compared to JSW Steel’s premium appreciation of 11x. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #Tata Steel #Mark To Read The Next Story