Tata Steel's Credit Metrics Expected To Strengthen In FY25: CreditSights

Ratings firm CreditSights on Monday said it expects the credit metrics of Tata Steel to improve in the ongoing fiscal aided by factors like infrastructure-led domestic steel demand and lower coking coal prices.

Tata Steel last week reported a 64.59% decline in consolidated net profit at Rs 554.56 crore for the March quarter from Rs 1,566.24 crore in the year-ago period, mainly on account of lower realisations and expenses on certain exceptional items.

In a report, CreditSights -- a FitchSolutions company -- said it expects Tata Steel's credit metrics to improve meaningfully in FY25, with net leverage projected to improve, driven by robust Ebitda growth and lower capex.

"We expect total FY25 Ebitda to grow robustly year-on-year in the mid 20% range, supported by robust infrastructure-led domestic steel demand, very slight recovery in steel price realizations aided by robust domestic demand...lower coking coal input costs that could offset higher iron ore input costs," CreditSights said.

"It also said Tata Steel's annual results 'were less poor than we feared."

Revenues and Ebitda fell 6% and 27% year-on-year, respectively, as continued losses from Europe and higher operating expenses outweighed strong India revenues and lower coking coal input costs, the ratings firm added.