Moody's Investors Service says that Tata Steel results for the fiscal year ended Mar. 31, 2015 (FY2015) were below expectation, but can be accommodated within its Ba1 corporate family rating and stable outlook.

''Tata Steel's FY2015 results were affected mainly by disruptions in the iron ore supply in India, the effects of which we expect will fade away over FY2016,'' says Kaustubh Chaubal, a Moody's vice president and senior analyst.

Chaubal was speaking on Moody's just-released report on Tata Steel, entitled ''Tata Steel's Ba1 Rating Holds Despite Weak FY2015 Results Marred by One-Off Items''.

Pressure on steel realizations and increases in costs for Tata Steel India's operations because of iron ore imports in particular, led to a sharp 24% year-over-year decline in EBITDA in FY2015 to Rs 101 billion. This pushed Tata Steel's leverage to 6.8x, breaching the downward rating trigger.

Nevertheless, Moody's expects the company's leverage to correct over the next few quarters as (1) Tata Steel uses its stock of imported iron ore and starts mining its own iron ore for Tata Steel India; (2) new shipments from the Kalinganagar plant add to its EBITDA; and (3) the European operations show sustained and better performance.

Specifically, Tata Steel India's EBITDA per tonne should bounce back to around USD 200/tonne in FY2016, from USD 186/tonne in FY2015.

Meanwhile, Tata Steel UK Holdings (TSUKH, B2 positive) results were stronger than expected owing to growth in the delivery of specialized products. Sales of new products surged 16% by volume and the company raised the total of new products in its portfolio to 113 by the end of FY2015.

The positive outlook captures the potential upside to TSUKH's operating and financial profile from an orderly sale of the long products business.

Tata Steel's Southeast Asian operations were affected by weak demand and a contraction in the rebar-scrap spread on the back of a significant increase in imports from China. Although Moody's expects Southeast Asian demand to remain steady, the revenue and contribution to Tata Steel's consolidated revenue and EBITDA will remain marginal.

Shares of the company gained Rs 1.65, or 0.5%, to trade at Rs 329.95. The total volume of shares traded was 14,107 at the BSE (9.18 a.m., Thursday).