Key Takeaways
- India’s steelmakers forecast a 40% Ebitda surge in FY26, outpacing global peers.
- Tata Steel expects a 45% profit rebound as European operations stabilize.
- Domestic steel demand forecast to grow 8–10% annually.
- Safeguard duty shields prices; expiry in November poses risk.
India’s Steel Sector Set for 40% Ebitda Surge in 2025–26 as Domestic Demand Soars
India Steel Sector Outlook 2025 signals robust growth as producers defy global headwinds, with S&P forecasting a 40% Ebitda surge on strong domestic demand. S&P Global Ratings forecasts a 40% surge in Ebitda for fiscal 2026—a growth trajectory that positions India’s mills ahead of international peers grappling with tariff uncertainty and weakening demand.
“India makes and consumes most of its steel domestically. With only 6% of output exported—and just 3% to the U.S.—the direct impact of U.S. tariffs is negligible,” S&P noted in its India Steel Sector Outlook 2025 report.
Tata Steel’s Profit Rebound
Tata Steel, India’s largest producer, expects a 45% jump in Ebitda to ₹380 billion in FY26, driven by ramp-ups in local production and the stabilization of European operations. Chairman N. Chandrasekaran reaffirmed that Tata’s green steel transition remains on schedule across the U.K. and Netherlands.
“We remain confident that the transition to green steel making in the U.K. and the Netherlands will happen as per schedule,” he said.
The company’s funds from operations-to-debt ratio is forecast to rise from 15% to 28%, signaling improved leverage as it invests in capacity expansion.
| Metric | FY24 | FY25 | FY26 Forecast |
|---|---|---|---|
| Domestic HRC Price (USD/t) | $740 | $760 | $820 |
| Coking Coal Price Change | +5% | -7% | -3% |
| Industry Ebitda (₹ bn) | 620 | 680 | 950 |
| Tata Steel Ebitda (₹ bn) | 260 | 262 | 380 |
| Debt/Ebitda Ratio | 3.5x | 3.0x | 2.4x |
India’s steel Sector: Policy Support and Price Strength
A 12% safeguard duty on steel imports, imposed in April, has cushioned domestic producers from falling global prices. From February to June, domestic hot rolled coil prices rose 7.6%, diverging from a 5% decline in China. S&P estimated that without the duty, Indian steel prices would have been $60 per ton lower.
With coking coal prices falling 7% over the same period, margins have remained strong, supporting profitability across the sector.
Risks Ahead
Still, S&P warned that expiry of the safeguard duty in November could expose domestic producers to underpriced imports, pressuring margins. A sharper correction in Chinese steel prices is another risk that could trigger a market-wide repricing.
Even so, the sector’s fundamentals remain healthy. Industry debt-to-Ebitda is forecast to improve from 3.5 times in FY25 to 2.4 times in FY26, suggesting most producers are well-prepared to absorb short-term volatility.
A Global Contrast
While India’s steelmakers advance, European and American mills are grappling with decarbonization costs, demand weakness, and unpredictable trade policy. The EU’s carbon border tax and U.S. tariffs have squeezed profitability, underscoring India’s relative advantage.
For now, India’s combination of domestic demand growth and calibrated protectionism leaves its producers in a strong position to outperform in the years ahead.
