Tata Steel slumps after recording loss of Rs 2,502 crore in Q3

Tata Steel tumbled 4.08% to Rs 112.80 after the company reported a consolidated net loss of Rs 2,502 crore in Q3 FY23 as against a net profit of Rs 9,598 crore in Q3 FY22.

Total revenue from operations during the quarter amounted to Rs 57,084 crore, down 6% YoY. The fall in revenues was primarily driven by drop in realisations across geographies.

While raw material cost rose by 17% to Rs 28,231 crore, other expenses declined by 7% to Rs 17,671 crore in Q3 FY23 over Q3 FY22.

EBITDA dropped by 74% to Rs 4,154 crore in Q3 FY23 from Rs 15,853 crore in Q3 FY22. EBITDA margin was approximately 7% in Q3 FY23. EBITDA per ton in the third quarter was Rs 5,806 as against Rs 22,610 in the same period last year, down 77% YoY.

The EBITDA decline was primarily driven by compression in margins at European operations.

Net debt stood at Rs 71,706 crore, with net debt to EBITDA at 1.76x and net debt to Equity at 0.65x.

The company spent Rs 3,632 crores on capex during the quarter. At Kalinganagar, phased commissioning of 6 MTPA pellet plant has begun. Work on 2.2 MTPA Cold Roll Mill complex and 5 MTPA expansion is ongoing.

In Punjab, work has commenced on enabling activities with respect to 0.75 MTPA Electric Arc Furnace, which is an important milestone in our journey to reduce emissions.

The British Steel Pension Scheme (BSPS) with Tata Steel UK as Sponsor has completed a substantial part of its de-risking journey with approxiametly 60% of its liabilities insured. The buy-in transaction along with actuarial movements has resulted in a non-cash deferred tax expense of Rs 1,783 crore and increased the overall deferred tax expense for the quarter to Rs 2,150 crore.

Neelachal Ispat Nigam Limited (NINL) has begun operations and is being ramped to rated capacity of around 1 MTPA. Tata Tiscon rebars are being made from NINL billets.

T V Narendran, chief executive officer & managing director, said: Domestic deliveries stood at around 13.7 million tons in the first nine months of the financial year and were up 4% YoY. Broad based growth was witnessed across most segments.

For the quarter, domestic deliveries were up 11% YoY and grew at a faster pace than India apparent steel consumption aiding in retaining market leadership position across chosen segments. Our crude steel production touched 5 million tons in 3QFY23 for the first time in India, with Neelachal Ispat Nigam limited commencing operations.

Moving to Europe, our deliveries were lower in 9MFY23 due to slowdown in demand. Recession concerns weighed on steel prices, which coupled with elevated energy costs affected our performance.

Looking ahead, there is visible pick up in steel prices across key regions on improved China demand outlook and sustained spending on infrastructure in India.

Koushik Chatterjee, Executive Director & Chief Financial Officer, said: Global steel prices have witnessed steady moderation amidst inflationary pressures and concerns about economic slowdown in the first nine months of the financial year.

In India, steel prices were subdued even as raw material costs moved lower. While this increased margins at standalone operations from around 16% in 2Q to approximately 18% in 3Q, European operations witnessed margin compression due to lower realisations and elevated input costs.

Free cash flow generated for the quarter stood at Rs 1,588 crore largely due to favourable movement in working capital. Our net debt has remained broadly stable on QoQ basis at Rs 71,706 crore and our liquidity position remains strong.

Tata Steel is among the most geographically diversified steel producers in the world and is one of the top global steel companies with an annual crude steel capacity of 34 million tonnes per annum and has operations and commercial presence across the world.

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