Tata Steel reports surprise profit on buoyant India sales volume

Jan 27 (Reuters) - Tata Steel India's second-biggest steelmaker by market value, posted a surprise third-quarter profit on Monday, helped by buoyant sales at home even as prices fell.

The company's consolidated net profit dropped about 36% compared with a year earlier to 3.27 billion rupees ($37.9 million) in the quarter ended Dec. 31, due to soft steel prices amid a flood of Chinese imports and weak demand in the European market.

It was still a surprise as analysts had estimated a loss of 2.47 billion rupees, per data compiled by LSEG. Sales volume for India, which accounts for 70% of total deliveries, rose 8.4%, as demand for steel at home remained buoyant.

Indian steel companies have been grappling with lower prices driven by a influx of steel imports from China over the past year, with shipments hitting an all-time high in the April-October period, a 35.4% increase year-on-year.

Chinese steel sells for $25 to $50 per metric ton cheaper than domestic steel and is sometimes as much as $70 lower, Reuters reported last month.

Tata Steel's revenue slipped about 3% to 536.48 billion rupees in the third quarter but beat expectations of 530.56 billion rupees.

Peer JSW Steel reported a bigger-than-expected drop in quarterly profit last week due to lower prices. JSW Steel said it expects Chinese steel imports to reduce in the fourth quarter, leading to higher domestic prices.