Tata Steel share price jumps 5% despite Jan-Mar quarter loss; here’s why investors are unfazed by Q4 results

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June 30, 2020 11:33 AM

The Ebitda (earnings before interest, tax, depreciation and amortisation) of Tata Steel fell by a sharp 40 per cent at Rs 4,669 crore but was ahead of estimates

tata steel, tata steel share priceTata Steel said its operations were severely impacted due to Covid-19 related lockdowns

Tata Steel share price jumped 5 per cent to hit day’s high of Rs 337.60 apiece on BSE, despite a consolidated net loss of Rs 1,236 crore in the January-March quarter of the financial year 2019-20. The company had reported a net profit of Rs 2,353 crore during the same period last year. Tata Steel was the top Sensex gainer in today’s trade. Tata Steel shares touched a 52-week low of Rs 250.90 on March 30, 2020. The stock has rallied 35 per cent from its March lows. With today’s gain in the stock price, market capitalisation of Tata Steel stands at Rs 38,370.44 crore. While it had hit a 52-week high of Rs 514.75 in July last year.

Research and brokerage firm Motilal Oswal Financial Services has maintained a neutral rating on the stock after the result announcement. The Ebitda (earnings before interest, tax, depreciation and amortisation) fell by a sharp 40 per cent at Rs 4,669 crore but was ahead of estimates. Tata Steel Europe and Tata Steel BSL reported positive EBITDA, of Rs 650 million and Rs 7.7 billion, respectively. The brokerage firm highlighted that EBITDA, however, was up 28 per cent sequentially, which was 15 per cent higher than its estimate of Rs 4,040 crore, led by improved performances from Europe and Tata Steel BSL.

Around 10.45 AM, Tata Steel shares were trading 4.23 per cent higher at Rs 334.85 apiece as compared to a 0.61 per cent rise in the S&P BSE Sensex at 35,176. The company said its operations were severely impacted due to Covid-19 related lockdowns. In view of such lockdowns, operations at the Group’s steelmaking facilities in India have been scaled down from the end week of March 2020.

Besides Tata Steel, other metal stocks were also trading higher. The S&P BSE Metal index was trading over 2 per cent higher at 7,346.86 levels. SAIL was up 5 per cent, Jindal Steel gained over 4 per cent, NMDC added 3.27 per cent, Hindalco was up 3.6 per cent, Coal India rose 0.67 per cent. Only Vedanta shares were trading red on BSE Metal index.

“Given the heightened uncertainty due to the Covid-19 pandemic, we are focused on conserving cash and ensuring adequate liquidity to face potential disruptions in the operating environment. We also raised additional funds of Rs 4,900 crore to build a contingency buffer,” said Koushik Chatterjee, executive director and chief financial officer, Tata Steel.

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