Tata Steel Q1 results: Profit falls 12.8% to Rs 7,765 cr, revenue up 18.6%

Tata Steel reported a consolidated net profit (attributable to the owners of the company) at Rs 7,765 crore for the quarter ended June, down 12.8 per cent over the year-ago period, in what the company described as a “challenging” quarter. Sequentially, net profit was down 20.4 per cent.

Revenue from operations at Rs 63,430 crore was higher by 18.6 per cent year-on-year (YoY). The numbers beat expectations on revenue and net profit. A poll of analysts by Bloomberg had estimated revenues at Rs 60,474 crore and net profit at Rs 7,275 crore. QoQ, revenues were down by 8.5 per cent.

Ahead of results, the Tata Steel stock on Monday closed at Rs 960.90 on the BSE, up 2.66 per cent.

While Tata Steel’s India operations recorded a fall in profits, Europe saw a surge. Segment results before exception items, interest, tax and depreciation of Tata Steel India stood at Rs 9,615.79 crore, down by 28 per cent YoY while Europe EBITDA recorded a 294 per cent increase to Rs 6,037 crore.

For Europe, it was the highest ever quarterly EBITDA. Revenue per tonne increased by £154 QoQ to £1,248 per tonne due to long-term contracts and product mix.

Deliveries from India, the company said, were marginally lower by 2 per cent YoY due to moderation in exports following the imposition of 15 per cent export duty. However, domestic deliveries were ramped up, it said.

At a consolidated level, raw material cost increased to Rs 31,319 crore from Rs 19,956 crore in the year-ago period due to higher coking coal consumption cost across entities. 

T V Narendran, chief executive officer and managing director, said, “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 per cent duty imposed on steel exports in the middle of the quarter.”

Koushik Chatterjee, executive director and chief financial officer, said the volatility in terms of steel price and input cost movement was expected to continue in the next quarter but expect the spreads to stabilise in the second half of the year.

He said the volatility in commodity prices and the immediate impact of the export duty in India had led to an increase in working capital but 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.

Net debt at the end of the quarter stood at Rs 54,504 crore and Chatterjee said that the financial metrics continued to remain strong with net debt to EBITDA <1.0x.

Chatterjee added that the company remained committed to its annual deleveraging target of $1 billion in line with the capital allocation strategy to reduce debt.

Tata Steel also said the 6 MTPA pellet plant at Kalinganagar will be commissioned in Q3FY23, followed by the cold roll mill complex and the 5 MTPA expansion.