Tata Steel on Tuesday beat analyst estimates on all fronts as it reported a threefold rise in the consolidated net profit on a year-on-year basis to Rs 3,116 crore for the July-September 2018 period.
Tata Steel on Tuesday beat analyst estimates on all fronts as it reported a threefold rise in the consolidated net profit on a year-on-year basis to Rs 3,116 crore for the July-September 2018 period, much above the Bloomberg consensus estimates of Rs 2,606 crore, as the company recorded strong revenues during the quarter.
Net sales in Q2FY19 grew 34% y-o-y to Rs 43,544 crore supported by better realisations and increase in volumes and Bhushan Steel contributing for the first full quarter. Analysts consensus estimates were of Rs 40,806 crore. The consolidated Ebitda (earnings before interest, taxes, depreciation and amortisation) rose a sharp 93% to Rs 9,000 crore.
Analysts had expected Ebitda at nearly Rs 7,134 crore. Consequently, the Ebitda margins were up a hefty 664 basis points y-o-y to 21%. The company’s Ebitda per tonne on a consolidated basis also witnessed a sharp increase and stood at Rs 12,131. Tata Steel’s India operations Ebitda per tonne was at a record Rs 9,244 — the highest in six years.
The company management said that Bhushan Steel’s integration and synergies have been on track and that is reflected in the Bhushan Steel Ebitda margin of Rs 10,291 per tonne. Bhushan Steel’s total deliveries jumped 34% sequentially to 1.14 million tons as improved marketing strategy helped in inventory reduction. Revenue increased to Rs 5,862 crore compared with Rs 4,624 crore in Q1FY19.
Koushik Chatterjee, group executive director (finance and corporate) said Tata Steel India’s performance was on the back of strong operating and market performance. “On the back of a strong India performance, the consolidated results of the company for the quarter reported 20% Ebitda margin despite a operationally weak quarter in Tata Steel Europe due to unplanned shutdowns and stoppages both in Ijmuiden and Port Talbot. While Ijmuiden has come back to its normal level of operations, the Blast Furnace 5 in Port Talbot is undergoing major repairs for life extension and will be out operation for this quarter,” he said.
Consolidated deliveries of 7.42 million tonnes, were up by 15% y-o-y.
Tata Steel’s gross debt during the quarter increased by Rs 2,065 crore to `1.18 lakh crore at the end of September, primarily pushed up by forex impact of Rs 3,528 crore. Net debt was flat at over Rs 1.04 lakh crore. Chatterjee said one of the key priorities going forward will be to reduce leverage by around a billion dollars in the next 12 months from the internal cash flows and other strategic initiatives on the portfolio.
The group’s liquidity position remains robust at Rs 26,470 crore comprising Rs 14,478 crore in cash and cash equivalents and Rs 11,992 crore in undrawn bank lines.
In an impressive performance, domestic deliveries increased by 7% sequentially to 3.18 million tons in Q2FY19 which was stronger than the domestic steel market demand growth of 2.1% q-o-q.
TV Narendran, managing director, Tata Steel said the company is making good progress on the TSE ThyssenKrupp JV. “We are in discussions with the European Commission for the phase II review which typically takes 90 days. While we are positive on steel demand outlook especially in India, the risk of trade wars and increasing imports remains a concern,” he said.