Tata Steel Q3 profit up 54% to Rs 1,753 cr on the back of higher revenues

Tata Steel on Friday reported a lower-than-expected consolidated net profit of Rs 1,753 crore for December quarter, up 54 per cent from the same period the previous year, on the back of higher revenues. 

Net sales of the company were at Rs 40,457 crore in the December quarter, a 22 per cent increase from the year-ago period as Tata Steel continued to increase its market share in chosen segments. The consolidated steel production of the company grew 11 per cent year-on-year to 7.23 million tonne and deliveries increased 7 per cent to 6.99 million tonne.

Tata Steel’s India revenues (including Bhushan Steel) increased by 41 per cent year-on-year to Rs 22,063 crore driven by higher volumes and better realisations. 

On a consolidated basis, Tata Steel’s automotive segment sales increased by 24 per cent year-on-year, while industrial products and projects segment sales grew by 29 per cent. Branded products, retail and solutions segment sales grew by 16 per cent with Tata Steel reaching 3 million retail customers, said the company release.

According to Bloomberg estimates, Tata Steel’s consolidated topline was seen at Rs 40,281 crore, while the bottomline was expected to be at Rs 2,231 crore.

The company’s total expenses on the consolidated basis rose 25 per cent to Rs 38,362 crore in the period under review from last year due to high raw material cost, which increased 35 per cent on year-on-year basis. “Tata Steel is committed to growing its India footprint while focusing on benchmark operational performance, superior market presence, strong customer relationships and sustainability. Despite a sharp drop in international steel prices, we were able to maintain our overall realisations and increase our volumes significantly in India,” T V Narendran, chief executive officer and managing director, was quoted as saying.

Tata Steel’s consolidated adjusted Ebitda improved by 27 per cent year-on-year to Rs 7,225 crore.  The standalone adjusted Ebitda during the same period was Rs 4,872 crore with the Ebitda margin of 28.4 per cent while Tata Steel Bhushan Steel reported an Ebitda of Rs 1,008 crore with a margin of 20.6 per cent. 

“The short-term finance taken for Tata Steel BSL (Bhushan Steel) acquisition has been refinanced with long-term loans of Rs 15,500 crore. During the quarter, Tata Steel Group generated operating cash flows of Rs 4,150 crore. We have repaid Rs 3,000 crore from Tata Steel BSL since the acquisition as part of the overall de-leveraging. The proceeds from the divestment of 70 per cent of our stake in our South-east Asia business as well as from the sale of our residual holding in TRL Krosaki will be used for further deleveraging,” Koushik Chatterjee, executive director and chief financial officer, was quoted as saying.

Tata Steel’s consolidated gross debt has declined by Rs 9,083 crore during the quarter including de-leveraging of over Rs 6,000 crore. 

The liquidity position of the Group remains strong at Rs 19,320 crore, including Rs 8,549 crore of cash and cash equivalents.

Integration of Tata Steel BSL continues and the 5 million tonne expansion at Tata Steel Kalinganagar is also on the track, said the company. Meanwhile, Tata Steel is looking forward to enhancing long products and downstream capability through acquisition of the 1 million tonne steel business of Usha Martin. The phase II review of the TSE ThyssenKrupp JV is ongoing and management is closely working with the European Commission to facilitate the same, it said.

In line with the company's strategy of divesting non-core assets and focusing on India, Tata Steel has announced divestment of 70 per cent stake in South East Asia business, and continues to work on exploring similar opportunities across the portfolio.