As of 09.56 a.m., Tata Steel shares traded 2.3 per cent higher at 366.05 on the NSE.
July-September consolidated net profit, after minority interest and share of associates, was Rs 917 crore, compared with a loss of Rs 364 crore a year earlier, Tata Steel said on Wednesday.
Net sales at the company, the second-largest steel producer in Europe, rose 7.4 per cent to Rs 36,370 crore. Analysts had expected a profit of Rs 367 crore on revenue of Rs 33,274 crore, according to Thomson Reuters I/B/E/S.
Tata Steel has raised prices in its home market and gained market share as a weak rupee curbed imports. It said a new steel plant being built in eastern India was making "good progress".
Tata Steel's net debt of 643.34 billion rupees is the highest among the six top steel companies in India.
European operations seen stabilising:
Tata Steel, however, said Europe was still challenging despite an improving performance there. Europe is Tata Steel's top market and production centre, but it has struggled there since gaining an entry through its $13 billion acquisition of Corus in 2007.
The company said its operations in the region were stabilising and production there grew sequentially some 3 per cent in the three months to September 30. Quarterly operating income from the region improved to Rs 554 crore, compared with an operating loss of Rs 40 crore a year earlier.
European steel demand is expected to pick up slowly in the third quarter and to continue to grow as steel-using sectors recover, said the company, which is trying to cut costs and focus on high-margin products.
Tata Steel's European operations "surprised us positively with better-than-expected volumes and profitability", Bhavesh Chauhan, an analyst at Mumbai brokerage Angel Broking, said.
(With inputs from Reuters)