Is Tata Steel the Strongest Link in the Tata Group?

When we think about the Tata Group, many legendary names like Tata Motors, TCS, Titan, etc., pop up. Each one is a heavyweight in its field. But when it comes to steel, Tata Steel has been one of its oldest and most iconic businesses. Now, the question is, “Is Tata Steel the strongest link in the Tata empire?” In this article, let’s dig deeper into the basics and financials of Tata Steel to find out! 

Tata Steel Ltd: More About the Company 

With the Tata Steel share price at around ₹150+, Tata Steel Ltd is one of the largest steel producers in India and a major player globally. It operates in India, Southeast Asia, and Europe. Founded in 1907 as the first integrated private steel company in Asia, Tata Steel caters to the Indian market with products like Rebar, Tubes, Wire Rods, Hot Rolled, Coated Coil, and more. 

In India, they target Energy and Power, Construction, Agriculture, Automotive Steels, and other product segments. The company also made the first industrial city in India, Jamshedpur. The company is known for its efficient operations and strong market presence. 

Financial Performance of Tata Steel Ltd

Tata Steel’s crude oil production in India saw a YoY growth of 5%, reaching 21.8 million tonnes in the financial year 2024-25. Its domestic deliveries in India also increased to 19.7 million tonnes, with a YoY growth of 4.4%, all thanks to India’s demand growth for steel. 

The company’s consolidated revenue till December 2024 of FY25 stood at ₹1,62,324 crores. EBITDA saw a YoY growth of 14% at ₹19,040 crores. The company also reported a PAT of ₹3,865 crores in Q3 FY25 in India, down from ₹4,475 crores in Q3 FY24. Tata Steel’s UK operations have been struggling. UK revenues were £523 million, and the company’s EBITDA loss stood at £67 million in the UK. 

Challenges and Strategic Shifts

Overall, Tata Steel is navigating a complicated landscape. The company’s global business, especially in the UK, faces challenges due to high costs and the need to transition to more sustainable practices. The company is investing in greener technologies, like electric arc furnaces, to reduce carbon emissions and align with global environmental goals. 

Recently, in February, the company received approval from the council to invest £1.25 billion in Port Talbot, South Wales. The investment is for a top-notch Electric Arc Furnace, and it is supported by £500 million in government funding. The aim of the project is to cut 90% of CO2 emissions and preserve about 5,000 jobs. The new facility should start functioning by 2027. These strategic shifts are necessary but come with significant costs and operational challenges. 

Tata Group’s Broader View

While Tata Steel is a significant part of the Tata Group, other Tata stocks like Tata Consultancy Services (TCS) and Tata Motors are also major contributors. 

Under the leadership of Natarajan Chandrasekaran, the Tata Group has been focusing on reducing debt, improving profitability, and transitioning to new business areas like electronics and semiconductors. Tata Group is also urging companies to make the most of AI and make technological shifts.  

TCS has been a consistent performer in the IT sector, contributing significantly to the group’s revenues and profits. Tata Motors has also been growing consistently, especially with its electric vehicle initiatives. These developments tell us that while Tata Steel is important, it is one of several strong pillars within the Tata Group.

Conclusion

Tata Steel remains a vital part of the Tata Group. However, challenges in its global operations, particularly in the UK, highlight the complexities it faces. While it is a strong link, the Tata Group’s strength lies in its diversified portfolio, with multiple companies contributing to its overall success. For investors, this diversification offers a balanced exposure to various sectors and reduces reliance on any single entity.