HomeFinanceTata Steel back in black with consolidated net profit of Rs 7,162 crore

Tata Steel back in black with consolidated net profit of Rs 7,162 crore

Tata Steel is back into the black with a consolidated net profit of Rs 7,162 crore for the quarter ended March 31, 2021 versus a net loss of Rs 1,615 crore in the corresponding quarter last year. However, the net profit was slightly beneath Bloomberg consensus estimates of Rs 7,421 crore.

The company’s consolidated revenues improved 39% on a year-on-year basis to Rs 49,977 crore, which was a lot above analysts estimates of Rs 46,105 crore. The consolidated Ebitda (earnings ahead of interest, tax, depreciation and amortisation), which was the highest ever, improved two-fold y-o-y to Rs 14,290 crore. Consequently the company’s Ebitda margins came in at 28.6%, up a steep 1520 basis points. The company’s Ebitda per tonne on a consolidated basis improved to Rs 18,253 versus Rs 6,838 in January-March 2020.

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On a consolidated basis, the business reported an enhance of 11% in the steel deliveries on a year-on-year basis. India steel deliveries grew 16% y-o-y to 4.67 million tonne in 4QFY21. The business also accomplished highest ever quarterly crude steel production in India of 4.75 million tonne throughout the quarter.

Commenting on the outlook on demand and any influence on production offered the ban on use of oxygen for industrial purposes, Television Narendran, CEO and managing director, Tata Steel, mentioned there is an influence getting seen on smaller and medium enterprises and fabrication sector, which are key customers of the gas. “There could be an impact on the fabrication business, there could be an impact on other areas like welding and cutting. We are also seeing some signs of activity slowing down in the construction sector, but that is largely got to do with the migrant workers problem and activity slowing in fabrication units,” he mentioned.

However, Narendran clarified that the ban on oxygen will not influence company’s production. “Demand side will see a greater impact than the production side,” he added.

Commenting on the economic functionality, he mentioned, “All our segments, especially automotive, have performed extremely well due to our continuous focus on building strong customer relationships, superior distribution network, brands, and new product developments. We are also making good progress on our various initiatives to de-risk the business while our digital marketing platforms are helping us reach new markets and be future ready. The second wave of Covid-19 in India is a risk and we are working to minimize the impact on our employees and communities while meeting the requirements of our customers”.

Koushik Chatterjee, executive director and chief economic officer, Tata Steel, mentioned that with disciplined capital allocation and tight working capital management via the year, Tata Steel’s complete year cost-free money flow following capex was about Rs 24,000 crore. “In the current financial year, we will reduce the debt levels by more than a billion dollars and also enhance the capital allocation to our strategic capex programme in India to complete the 5MTPA expansion in Kalinganagar,” he mentioned.

Tata Steel’s decreased its gross debt by more than Rs 20,000 crore throughout the quarter and complete year de-leveraging was about Rs 28,000 crore. As a outcome, the year-finish net debt was Rs 75,389 crore which is 28% decrease compared to the preceding year finish. Chatterjee mentioned that the aggressive prepayment of debt has resulted in a sharp improvement of the capital structure metrics with the net debt to equity beneath 1x and net debt to Ebitda at about the lengthy term target level of 2.44x.

Steel deliveries at Tata Steel Europe grew 17% sequentially and 3% y-o-y to 2.47 million tonne in 4QFY21. EBITDA enhanced sharply to £125 million in throughout the quarter.

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