by Prashant Marathe | EduInvesting.in | 23 May 2025
🧠 At a Glance (Consolidated, FY25):
| Metric | Value |
|---|---|
| 💰 Revenue from Ops | ₹2,18,542 Cr |
| 📈 Net Profit | ₹3,173 Cr |
| 🧾 EPS | ₹2.74 |
| 📍 CMP | ₹161 |
Tata Steel just wrapped up a drama-heavy FY25 with a subdued PAT of ₹3,173 Cr — down from its FY24 loss of ₹4,910 Cr, but still way below its 2021–22 glory days.
The revenue looks solid. But the market isn’t cheering. Why?
🏢 About the Company
Tata Steel is India’s steel kingpin, with operations across:
- 🇮🇳 India: ultra-integrated and profitable
- 🇬🇧 UK: painful (Port Talbot saga)
- 🇳🇱 Netherlands: still negotiating carbon and compliance with the Dutch government
- 🇸🇬 SEA and others
They’re in the midst of a multi-year decarbonisation pivot, driven by policy, ESG, and regulatory pressure — especially in Europe.
📊 Quarterly Snapshot (Consolidated)
| Quarter | Revenue (₹ Cr) | PAT (₹ Cr) | EPS |
|---|---|---|---|
| Q1 FY25 | ₹56,218 | ₹3,329 | ₹2.67 |
| Q2 FY25 | ₹56,218 | ₹3,591 | ₹2.88 |
| Q3 FY25 | ₹53,648 | ₹3,878 | ₹3.11 |
| Q4 FY25 | ₹56,679 | ₹1,201 | ₹1.04 |
📉 Net profit dipped sharply in Q4 despite stable revenue — largely due to exceptional items, tax, and forex impacts.
🧾 Dividend Declared:
- ✅ ₹3.60 per share (face value ₹1)
- 💰 Yield ≈ 2.2% at CMP ₹161
- No bonus issue this year
🧮 Forward Valuation (FV)
Trailing EPS: ₹2.74
Steel sector average P/E: 15x
🧮 FV = ₹2.74 × 15 = ₹41.10
📍 CMP = ₹161
😬 Valuation is massively stretched unless EPS rebounds 4–5x
⚠️ Auditor’s & Balance Sheet Highlights:
1. 🧯 Net Profit Margin = 1.45%
That’s razor-thin. Steel is a capital-intensive biz. Anything under 5% net margin = commodity struggle.
2. 🧾 Debt Situation
- Total Debt = ₹1,01,948 Cr
- Net worth = ₹91,170 Cr
➡️ Debt/Equity = 1.11
Not terrifying, but still high for a cyclic business with weak global pricing
3. 🧊 Europe Remains a Drag
Tata Steel UK:
- Huge write-downs in FY24
- Reversed ₹260 Cr in Q4 FY25, but Port Talbot EAF transition remains expensive
- Needs UK government funding + capital infusion to survive
Tata Steel Netherlands:
- Carbon fines + environmental orders
- Dutch gov funding still under negotiation
📉 Overall: Europe barely breaking even, if at all
4. 🧾 Exceptional Items (FY25 Total): ₹854.64 Cr
Includes:
- Impairments (UK heavy-end asset shutdown)
- Restructuring provisions
- Environmental compliance penalties
- Contribution to electoral trust? (yes, seriously)
5. 🧾 New Accounting Policy Drama:
Tata Steel changed its valuation method for subsidiaries to “fair value through OCI” instead of cost.
➡️ That means losses won’t hit the P&L, only the balance sheet.
➡️ Looks cleaner, but optics over substance?
🧠 EduInvesting Take
Tata Steel India is solid. It generates over ₹28,000 Cr in EBIT and funds group ops.
But the global empire?
- 🇬🇧 UK unit is in state-sponsored life support
- 🇳🇱 Netherlands is stuck in environmental red tape
- SEA = breakeven
Unless steel prices rise, or Europe gets its act together, don’t expect EPS to fly anytime soon.
🔍 Segment Highlights (FY25 Revenue)
| Segment | Revenue (₹ Cr) |
|---|---|
| Tata Steel India | ₹1,32,516 |
| Europe | ₹76,416 |
| SEA | ₹7,472 |
| Neelachal | ₹5,701 |
🧾 Inter-segment adjustments bring net to: ₹2,18,542 Cr
⚠️ Red Flags
| Risk | Status |
|---|---|
| ❗ Europe Drag | Still heavy |
| ⚠️ High Debt | ₹1L+ Cr |
| ❌ EPS Collapse | ₹2.74 full year |
| 📉 Low ROCE | Barely mid-single digits |
| 🔄 Constant restructuring | UK + Netherlands plants shifting tech |
🧪 Final Verdict: Steel Is Strong, But This Stock Is Slippery
At CMP ₹161, you’re paying 59x trailing earnings.
Unless FY26 sees 3x–4x PAT jump, this is overvalued.
✅ Good for PSU dividend investors
❌ Risky for short-term traders
❌ Not “value” unless it drops below ₹80–90 range
EduInvesting Score: 2.5/5
Hold if you love the Tata name. Exit if you want actual growth.
Tags: Tata Steel FY25 Results, Tata Steel EPS 2025, Europe Losses, Carbon Impact Steel Stocks, PSU Steel Valuation, EduInvesting audit mode, Decarbonisation in Metals, Tata Steel UK, Tata Steel Netherlands
