Tata Steel Q2 net profit down 87.3% to Rs 1,514 cr over decline in margins

Tata Steel reported a consolidated net profit at Rs 1,514.42 crore in July to September quarter (Q2FY23), down by 87.3 per cent, on the back of declining margins. In the year-ago period, net profit was at Rs 11,918.11 crore.
 

Revenues from operations at Rs 59,877.52 crore was marginally down from Rs 60,387.13 crore in the year-ago period. While revenues came in higher than expectations, profits fell short of estimates. A Bloomberg consensus estimate pegged revenues at Rs 56,321.5 crore and net income at Rs 3,154.7 crore.
 

Sequentially, revenues were down 5.6 per cent and net profit by 80.49 per cent.
 

T V Narendran, chief executive officer and managing director, Tata Steel, said, concerns about slowdown in key economies, persisting geopolitical issues, coupled with seasonal factors, led to a volatile operating environment.
 

“Despite these headwinds, Tata Steel registered best-ever domestic sales in India, enabled by a strong product portfolio and an extensive distribution network, which services end-to-end requirements in chosen segments,” he said.
 

However, it was offset by fall in realisations and high-priced raw materials.
 

Deliveries from Europe operations were lower on QoQ basis, in part due to seasonal factors and subdued demand in Europe. Turnover was £2,307 million and Ebitda was £199 million, which translates to an Ebitda of £106 per tonne.
 

Gross debt in the September quarter stood at Rs 87,516 crore compared with Rs 82,597 crore in the June quarter.
 

Koushik Chatterjee, executive director and chief financial officer, Tata Steel, said the quarter saw bunching of several large cash payouts, including the highest-ever dividend payout relating to financial year 2021-2022, the acquisition of NINL, an accelerated capex driven by the need to complete the Tata Steel Kalinganagar Phase II.
 

However, while gross debt increased, Chatterjee said the financial metrics continued to be well within the investment grade level. He said the company would work towards reducing it by the year-end.
 

The Tata Steel management is expecting gradual improvement in the second half.

UK operations

On the support under discussion with the UK government for its transition to green steel, Narendran said discussions with the new government had not yet happened. But the company’s proposal was with the government. “We have to give them some time to come back to us… As we have said, we want a decision sooner than later,” he said.