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Tata Steel posts 21% fall in Q1 profit, still beats estimates

The company’s earnings beat Bloomberg analysts’ consensus estimate, who were expecting the firm to post a net profit of Rs 7,275 crore for the reporting quarter.

Tata Steel posts 21% fall in Q1 profit, still beats estimates
Tata Steel’s total revenue from operations rose 18.64% to Rs 63,430.07 crore from Rs 53,465.43 crore recorded during the year-ago period

Impacted by rising expenses, Tata Steel on Monday posted a 21.03% drop in consolidated net profit at Rs 7,714 crore in the first quarter ended June, but the earnings beat the street estimates. The company had posted a net profit of Rs 9,768.34 crore for the same period a year ago.

The company’s earnings beat Bloomberg analysts’ consensus estimate, who were expecting the firm to post a net profit of Rs 7,275 crore for the reporting quarter.

Tata Steel’s total revenue from operations rose 18.64% to Rs 63,430.07 crore from Rs 53,465.43 crore recorded during the year-ago period. Consolidated Ebitda stood at Rs 15,047 crore, while net debt was at Rs 54,504 crore and net debt to Ebitda at 0.87 times, it said in a statement.

The firm’s total expenses, including cost of materials consumed and financial costs, rose to Rs 51,912.17 crore in the June quarter, compared with Rs 41,490.85 crore recorded during the same period a year ago.

“This has been a challenging quarter for the global and Indian economy with rising interest rates, supply chain constraints and slowdown in China due to Covid-19. Despite these multiple headwinds, Tata Steel has delivered a strong performance with an improvement in margins. Our strong marketing franchise and superior business model in India enabled us to successfully pivot and increase our domestic deliveries to counter the 15% duty imposed on steel exports in the middle of the quarter,” Tata Steel CEO and MD TV Narendran said.

“Our European business delivered a sharp improvement in performance as long-term contracts and product mix helped drive a strong increase in realisations. We are geared towards commissioning the 6 MTPA pellet plant at Kalinganagar in the third quarter of FY23, which will drive cost savings followed by the Cold Rolling Mill complex and the 5 MTPA expansion project,” he added.

The company’s deliveries in India were marginally lower by 2% on a year-on-year basis due to moderation in exports, following the imposition of 15% export duty. Revenue per tonne rose by Rs 8,534 on a quarter-on-quarter basis to Rs 83,625 per tonne due to long-term contracts and product mix. The firm’s reported Ebitda stood at Rs 9,582 crore, which translates to an Ebitda per tonne of Rs 23,557.

“The volatility in commodity prices and immediate impact of the export duty in India have led to an increase in working capital but our cost improvement and other initiatives along with expected pickup in demand in the second half of the year should result in normalisation of working capital. In spite of significant working capital pressures,” executive director and CFO Koushik Chatterjee said.

Ahead of the earnings, shares in Tata Steel closed up 2.66% at Rs 960.90 on the BSE.

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