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Tata Steel logs eightfold rise in Q2 PAT on delivering strong results across key geographies

Consolidated revenue increased by 54.8% yoy to Rs60,282.8cr in the quarter under review.

November 12, 2021 3:29 IST | India Infoline News Service
An employee sits in a railway train cabin at the steel works operated by Tata Steel in Port Talbot. Bloomberg
One of the country's largest steel producers, Tata Steel recorded a strong September 2021 (Q2FY22) earnings where net profit rose by a whopping eightfold or 661% to Rs11,918cr in comparison to the previous year similar quarter. The company's Q2 surpassed street's expectations.

Consolidated revenue increased by 54.8% yoy to Rs60,282.8cr in the quarter under review. Consolidated Free Cash Flow was Rs.3,322 crores during 2QFY22 despite an increase in working capital of Rs.3,889 crores and dividend payment of Rs.3,020 crores.

The company spent Rs.2,191 crores on CAPEX during the quarter, work on the Pellet plant, the Cold Roll Mill complex and the 5 MTPA expansion at Kalinganagar is ongoing.

Gross debt decreased to Rs.78,163 crores with repayments of Rs.11,424 crores in 1HFY22. Net debt declined to Rs.68,860 crores. Net debt to EBITDA improved to 1.21x; Net debt to equity improved to 0.79x.

T V Narendran, Chief Executive Officer & Managing Director said, "Tata Steel has delivered strong results across key geographies in this seasonally weaker quarter. Our steel deliveries in India expanded by 11% despite a contraction in market demand which is a testament to the strength of our franchise. We continue to drive value accretive growth in our chosen segments and our performance in key segments such as auto was very robust despite the sector being impacted by the semiconductor shortage. Our European operations have also delivered robust performance underpinned by strong improvement in realizations. We are watchful of the elevated coal prices and high energy cost as key risks to margins going forward."

"We took another step in our sustainability journey and commissioned 5 TPD CO2 capture plant at Jamshedpur; first in India by a Steel company to extract CO2 directly from Blast Furnace gas. We continue to progress on our stated goals of expanding and consolidating our operations in India. Our 5 MTPA TSK phase II expansion including the pellet plant and CRM complex is progressing well and the merger of Tata Steel BSL with Tata Steel will be completed shortly. We have recently won the high-quality Gandhalpada iron ore mines which helps us achieve raw material security beyond 2030. In line with our capital allocation strategy, we recently exited our operations in Singapore through the sale of NatSteel," Narendran added.

Tata Steel is pursuing the hydrogen route in IJmuiden and a detailed assessment is underway. This involves the introduction of direct reduced iron (DRI) technology which can make iron using natural gas or hydrogen before it is converted to steel. Tata Steel has completed the divestments of its 100% stake in NatSteel Holdings Pte. Ltd. Singapore.

At around 3.25 pm, Tata Steel was trading at Rs1285 per piece down by Rs13.95 or 1.07% on Sensex. 

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