Tata Steel reports whopping 139% yoy jump in Q3 consolidated profit to Rs9,598cr; Stock climbs 2%

7 Feb 2022 , 09:19 AM

Tata Steel Limited reported 139% yoy higher consolidated profit at Rs9,598cr in the December 31, ended quarter of FY22 against Rs4,011cr during the same year of FY21.

Consolidated Revenues in Q3FY22 at Rs60,783cr were broadly stable on qoq basis from Rs60,387cr in Q2FY22 as improvement in net realisations more than offset the drop in volumes. Revenue jumped from Rs41,935cr in Q3FY21.

Consolidated EBITDA stood at Rs15,853cr compared to Rs9,652cr in Q3FY21 and Rs16,618cr in Q2FY22. Consolidated Free Cash Flow was Rs6,338cr during Q3FY22 despite an increase in working capital of Rs2,045cr.

The company has spent Rs2,790cr on capex during the quarter. Work on the Pellet plant, the Cold Roll Mill complex and the 5 MTPA expansion at Kalinganagar is ongoing.

During early trade on Monday, Tata Steel Ltd was trading at Rs1200.00 per piece up Rs23.85 or 2.03% from its previous closing of Rs1,176.15 on the BSE.

On 9MFY22 basis, Tata Steel generated free cash flow of Rs13,214cr. Gross debt decreased to Rs72,603cr with repayments of Rs17,376cr in 9MFY22. Net debt declined to Rs62,869cr. Net debt to EBITDA improved to below 1; Net debt to equity improved to 0.68x.

Tata Steel Long Products, a subsidiary of Tata Steel, has been announced as the winner of the bidding process to acquire a 93.71% stake in the 1 million ton per annum Neelachal Ispat Nigam Limited.

India’s operations:
Crude steel production increased by 2% qoq and 4% yoy to 4.81 mn tons.
Domestic deliveries increased by 2% qoq. Sales volume to Automotive segment remained steady qoq despite 9% drop in Auto OEM production due to semiconductor shortages.
Quarterly adjusted EBITDA stood at Rs12,434cr and Profit after tax stood at Rs7,787cr.

Europe operations:
Revenues increased by 7% qoq and 56% yoy to £2,246 million in Q3FY22.
EBITDA was £290 million which translates to an EBITDA per ton of £134.
In yet another step towards reducing carbon emissions, Tata Steel is conducting trials to inject Coal Bed Methane gas into a blast furnace to reduce coke consumption during steelmaking. The trial will also provide useful insights regarding operation of blast furnaces with hydrogen-based injectants
The merger of Tata Steel BSL with Tata Steel has been completed.

T V Narendran, Chief Executive Officer & Managing Director, said: “India steel demand has begun to improve on the back of continued economic recovery as 3rd wave of COVID begins to ebb. Our steel deliveries in India expanded by 4% in the first nine months of the financial year along with an improvement in product mix. We continue to drive value accretive growth in our chosen segments and our performance in key segments such as auto was robust despite the sector being impacted by the semiconductor shortage. Our European operations continue to perform underpinned by strong improvement in realizations.

We continue to progress on our stated goals. We became the first company in the world to conduct trials to inject Coal Bed Methane gas into a Blast Furnace in a bid to reduce emissions. Our 5 MTPA TSK phase II expansion including the pellet plant and CRM complex is progressing well. Tata Steel Long Products has been declared the winning bidder for Neelachal Ispat Nigam Limited. This will enable us to significantly ramp up our Long products portfolio and benefit from the growth in infrastructure in India and retail housing growth in semi urban India. We will leverage our retail brands and pan India distribution network to drive scale, profitability and cashflows.”

Koushik Chatterjee, Executive Director and Chief Financial Officer: “Tata Steel continued to deliver strong operating and financial performance in Q3FY22 with year on year EBIDTA growth of 64% and Profit after Tax growth of 139%. The company posted strong operating cash flows in the quarter despite a significant surge in international coal prices and increased working capital requirements.

Despite market volatility, the revenues were broadly stable at Rs60,783cr while EBIDTA was Rs15,853cr which works out to a margin of 26% with Tata Steel Standalone EBIDTA margin at 38%. Our cash outflow on consolidated capex for the quarter was Rs2,790cr taking the nine months’ capex to Rs6,416cr which is well within the earlier guidance.”