Tata Steel CEO TV Narendran is cautiously optimistic; Strong Q1 ahead sees steel prices rise in India, UK and Europe

Tata Steel is heading into the first quarter of FY27 with improving price collections in all three of its key geographies, India, the United Kingdom and the Netherlands, as rising input costs from the West Asia crisis continue to squeeze margins in the global steel industry.

Speaking to ET Now, CEO and MD TV Narendra outlined a cautiously optimistic outlook, with volume growth in India, a healthy pricing environment in Europe and long-awaited policy support finally arriving for the UK business in March.

Price recovery in all 3 geographies

In India, net recoveries for Q1 FY27 are guided to be around ₹6,000 per tonne higher than the Q4 average, attributed to the recovery in Narendra Modi steel prices returning to levels seen nearly a year ago, after a sharp fall in the first half of FY26.

Europe shows similar momentum. EU safeguard duties, import quotas and the Carbon Border Adjustment Mechanism (CBAM) have collectively tightened the market, driving up prices. Tata Steel’s Q1 guidance for the Netherlands is about 80 euros per tonne from Q4 levels. In the UK, where the company had been seeking government policy support for an extended period, that support finally came in March, and Q1 prices are also expected to be around 80 pounds per tonne higher than Q4.

Narendran was measured in his reading of what this meant for the margin. Cost pressures are increasing in parallel, so the full benefit of price increases will not reach the bottom line. That said, it expects margins to improve in India and the UK, given decent EBITDA performance across Europe.

The West Asia Crisis: Multiple Cost Pressure Points, Not One

Tata Steel’s exposure to West Asian disruptions is spread across several input categories rather than concentrated in a single commodity, making it harder to hedge but less exposed to catastrophic failure of any one supply chain.

The company sources limestone from the Middle East, propane from the same region and coal from Australia, where miners themselves are facing rising fuel costs. Coking coal, which fell below $200 per tonne, has since rebounded to the $230-240 range. Shipping costs, freight rates and insurance premiums have all gone up together.

“There is pressure, not one big impact, multiple impacts at multiple consumption points,” Narendran said. So far, the company has been able to pass on most of these cost increases to consumers, but Narendran acknowledged that consumers face their own inflationary pressures, and continues to monitor the situation carefully.

On the supply chain side, Tata Steel moved quickly to find alternative limestone sources and shifted to substitute gases where propane was constrained. With around 50-60 days of stock kept as a buffer, operations were not disrupted – although the cost of shifting to alternative sources added to the wider input cost inflation.

Volume growth in India and capital expenditure plan of ₹20,000 crore

India is the central growth engine. The Kalinganagar plant is progressing strongly, and Tata Steel expects an additional volume of around two million tonnes in FY27 versus FY26, almost entirely from the Indian operation. The Netherlands business is already running close to full capacity at 6.7 million tonnes, close to its 7 million tonne ceiling, limiting further volumes there.

For capex, Tata Steel has budgeted around ₹20,000 crore for FY27 across geographies, with 60-70% earmarked for India. On a sustained basis, Narendran indicated that India’s capex of ₹10,000-15,000 crore per annum is required to meet the company’s growth ambitions – including 50 lakh tonne Nilachal expansion, 1.5 million tonne addition at Merammandali, downstream facilities including galvanizing line at Tarapfield and Jamfield line under Government of Maharashtra and Green Line currently at Jamfield of Government of Maharashtra. Discussion

Net debt fell by around ₹2,500 crore to around ₹80,000 crore during the year, with net debt to EBITDA at 2.3, comfortably within the company’s stated range of 2.5. UK operations are targeted to reach breakeven during the year, with Q3 as the base case and Q2 as the stretch goal.