Tata Metaliks plunges 8% as Q1 net profit falls 99% YoY to Rs 1.2 crore

Shares Tata Metaliks dipped 8 per cent to Rs 645 on the BSE in Thursday’s intra-day trade after the company reported a sharp decline in its profit after tax (PAT) to Rs 1.22 crore in June quarter (Q1FY23), due to higher raw material cost. The Tata Group company, engaged in pig iron business, had PAT of Rs 94.72 crore in the year-ago quarter (Q1FY22).

Sales Volume of Pig Iron & DI Pipe during the quarter fell by 23 per cent and 8 per cent, respectively, on a year-on-year (YoY) basis owing primarily to softening of market sentiment of Pig Iron from mid-May onwards. Pig Iron prices also witnessed a sharp drop in market prices after imposition of export duty by the Government on May 22, 2022.

However, revenue for the quarter saw an increase of 11 per cent YoY driven by increased realization of both Pig Iron and DI Pipe by 36 to 40 per cent.

"On the raw materials front, coal and coke prices moved up significantly (coke price was up 30 per cent over March 2022 quarter or Q4). Profitability was severely impacted in the quarter owing to these factors," Tata Metaliks said.

Significant increase in coal, coke, and consumable prices, continuing drag of old orders (booked in FY21) of DI Pipe and a sharp drop in Pig Iron prices post imposition of 15 per cent export duty on Pig Iron have severely dented the company's profitability during the quarter, the management said.

Government's increased investment in water infrastructure is expected to keep the demand for DI Pipes robust, though July-September quarter (Q2) is a seasonally weak quarter. Subsequent quarters are expected to be much better with demand of DI Pipe picking up and supported by additional volumes from the new DI Pipe plant, it added.

Meanwhile, since the beginning of July, the Pig Iron market has stabilized and has shown a slight upward trend. Coal prices have dropped significantly with Prime hard coking coal having come down from $500/t FOB average in May to below $300/t average in July. All these factors present a positive outlook for Pig Iron business in Q2, it added.

At 09:48 am, Tata Metaliks was trading 5 per cent lower at Rs 665, as compared to 0.46 per cent rise in the S&P BSE Sensex. The stock had hit a 52-week low of Rs 622.45 on June 20, 2022. Moreover, it has more-than-halved from its 52-week high level of Rs 1,364.90, touched on July 30, 2021.