Authors: Polus Ibrahim, Anmar Alaa, Assistant Professor Mr. Manoj Sangisetti
Abstract: This study presents a comprehensive Cost-Volume-Profit (CVP) forecasting analysis for TATA Steel Ltd., aiming to support managerial decision-making through financial modeling and performance forecasting. Historical data from FY2020 to FY2024 shows a strong upward trend in sales, with significant growth in FY2021 and FY2022, followed by a slight decline in FY2024. Using a CAGR of 23.58%, future sales are projected to reach ₹406,369.72 Cr by FY2029, offering a reliable basis for long-term financial planning and investment strategies. EBIT and contribution margin forecasts, derived through the marginal costing equation and CAGR method, indicate continued operational scalability. EBIT is expected to reach ₹55,538.28 Cr by FY2029, despite pressures from rising fixed and variable costs. The declining P/V ratio—from a peak of 57.24% in 2022 to a projected 37.34% in 2029—signals reduced margin efficiency, underscoring the need for vigilant cost control and strategic pricing. Rising fixed costs have pushed break-even sales higher, growing at an estimated 22% annually, reinforcing the importance of cost structure optimization in sustaining profitability. Despite these challenges, the Margin of Safety (MoS) is projected to increase significantly, reflecting enhanced financial resilience. Furthermore, a gradual decline in the Degree of Operating Leverage (DOL) from over 3.0 to 2.73 suggests a shift toward a more stable and scalable business model. Together, these insights enable TATA Steel to better manage risk, align growth with profitability, and make informed, forward-looking decisions in a competitive market environment.
