Tata Steel credit metrics to improve in FY25: CreditSights

CreditSights, a Fitch Solutions company, anticipates improving Tata Steel's credit metrics in the current fiscal year. This positive outlook is attributed to infrastructure-driven domestic steel demand and lower coking coal prices. Last week, Tata Steel reported a 64.59% decline in consolidated net profit for the March quarter, amounting to US$ 66.7 million (Rs. 554.56 crore), compared to US$ 188.5 million (Rs. 1,566.24 crore) in the same period the previous year. This decline was primarily due to lower realizations and expenses for certain exceptional items.

In its report, CreditSights projected a meaningful improvement in Tata Steel's credit metrics for FY25, driven by robust EBITDA growth and reduced capital expenditures. The firm expects total FY25 EBITDA to grow by approximately 20-25% YoY, supported by strong infrastructure-led domestic steel demand, a slight recovery in steel price realizations, and lower coking coal input costs, which could offset higher iron ore input costs. CreditSights also noted that Tata Steel's annual results were "less poor than we feared." Revenues and EBITDA decreased by 6% and 27% YoY, respectively, as continued losses from European operations and higher operating expenses outweighed strong Indian revenues and reduced coking coal input costs.

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