Tata Steel shares gain 3% on strong September quarter results

Shares of Tata Steel rose 3 per cent to Rs 499 on the BSE on Saturday after delivering strong results in India with broad based, market leading volume growth and strong cash flow generation during the September quarter (Q2FY21).

The company’s Ebitda (earnings before interest, taxes, depreciation, and amortization) from India operations surged 4.1 times quarter-on-quarter (QoQ) and 49 per cent year-on-year (YoY) to Rs 6,025 crore, driven by higher volumes, improved realizations and cost efficiencies.

In Q2FY21, the company’s consolidated Ebitda surged 10.4 times QoQ and 60 per cent YoY to Rs 6,217 crore while consolidated profit after tax from continuing operations increased by 136 per cent QoQ to Rs 1,635 crore.

The free cash flow generated during the quarter was Rs 7,832 crore. The company said it is committed to deleveraging of $1billion annually and has reduced net debt by Rs 8,197 crore during the quarter.

However, on a year-on-year (YoY) basis, consolidated net profit down 50 per cent as tax expenses ate into the profits even as sales were up. Net sales of the company stood at Rs 36,476 crore in the period under review, up 7.4 per cent from same period last year due to higher volumes, improved realisations and cost efficiencies. Tax expense of Rs 613 crore in the September quarter hurt the company’s bottomline in the period under review.

Tata Steel said it has initiated discussions with SSAB Sweden, based on interest received for the potential acquisition of Tata Steel’s Netherland business, including Ijmuiden steelworks.

The company has also commenced discussions with the Supervisory Board and Board of Management of Tata Steel Netherlands and the process will move to the next stage including due diligence and stakeholders’ consultations. The company is committed to deploy proceeds of any strategic restructuring towards additional deleveraging of the balance sheet, it said.

Tata Steel further said that it has initiated the process to separate Tata Steel Netherlands and Tata Steel UK and will pursue separate strategic paths for the Netherlands and UK business in the future.

Besides, Tata Steel continues its dialogue with the UK Government on potential measures to safeguard the long-term future of Tata Steel UK and is also reviewing all options to make the business self-sustaining without the need for any funding support from Tata Steel India in the future, it said.