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Tata Steel Q1 Results FY22-2023

25 July 2022

Tata Steel announced its financial results for the first quarter of FY23 on 25th July 2022. The profit after tax (PAT) for the quarter for the steel major stood at Rs. 7.764.96 crore, declining 12.82% YoY (year on year) from Rs. 8.906.95 crore reported in the same quarter of the previous year. 

This fall in profits may be attributed to the increased commodity and raw material costs, which rose to Rs. 26.319.86 crore in Q1 FY23 from Rs. 16.034.08 crore in Q1 FY22. There was also an increase in purchase of stock-in-trade, employee benefit expenses, as well as in other expenses of the company.   

The revenue from operations of the steel producing giant was, however, reported at Rs. 63.430.07 crore in Q1 FY23, an 18.64% YoY increase against the Rs. 53.465.43 crore the company announced in Q1 FY22. 

Looking at the Indian market, deliveries were marginally lower by 2% YoY, mainly due to moderation in exports, as a result of the imposition of the 15% export duty. Consequently, domestic deliveries were successfully ramped up by the company by leveraging their strong marketing network and agile business model. Revenue per ton rose by Rs. 8,534 QoQ (quarter on quarter) to Rs. 83,625 per ton because of the long term contracts and the product mix.

Consolidated EBITDA for the quarter stood at Rs 15,047 crores. The EBITDA margin improved to 24% (on a QoQ basis) and EBITDA per ton increased by Rs 3,780 to Rs 22,717. Looking at the company’s European operations, it achieved the highest ever quarterly EBITDA at £621 million, which translates to an EBITDA per ton of £290. The revenue from Europe’s operations was up by 33.54% YoY to Rs. 25,960.88 crore in Q1 FY23.

The net debt of the steel producer was reported at Rs.54,504 crores. Net Debt to EBITDA ratio was 0.87x and the Net Debt to Equity ratio was 0.48x in the quarter ended 30 June 2022. 

Tata Steel reported its earnings per share (EPS) for Q1 FY23 at Rs. 63.59, which declined by 14.35% YoY from Rs. 74.24 in Q1 FY22. However, ahead of the results, the Tata Steel share closed in the green at Rs. 964.70, rising 3.06% from the previous day's closing. 

Hits of Tata Steel Q1 Results

  • The revenue from operations stood at Rs. 63.430.07 crore in Q1 FY23, a 18.64% YoY increase from Rs. 53.465.43 crore in Q1 FY22.
  • Revenue per ton rose by Rs. 8,534 QoQ to Rs. 83,625 per ton.
  • EBITDA margin improved to 24% QoQ.
  • The European operations achieved the highest ever quarterly EBITDA at £621 million.

Misses of Tata Steel Results

  • The profit after tax (PAT) for the quarter stood declined by 12.82% YoY to Rs. 7.764.96 crore in Q1 FY23.
  • Deliveries pertaining to the company’s Indian operations were lower by 2% YoY.
  • The EPS for Q1 FY23 stood at Rs. 63.59, declining 14.35% YoY.

Segment-wise revenue of Tata Steel Quarterly results

  • Tata Steel India: Revenue up by 15.64% YoY to Rs. 32,021.09 crore in Q1 FY23 from Rs. 27,689.55 crore in Q1 FY22.
  • Tata Steel Long Products: Revenue up by 18.17% YoY to Rs. 1,994.25 crore in Q1 FY23 from Rs. 1,687.64 crore in Q1 FY22.
  • Other Indian Operations: Revenue up by 30.85% YoY to Rs. 5,519.59 crore in Q1 FY23 from Rs. 4,218.10 crore in Q1 FY22.
  • Tata Steel Europe: Revenue up by 33.54% YoY to Rs. 25,960.88 crore in Q1 FY23 from Rs. 19,441.01 crore in Q1 FY22.
  • Other Trade Related Operations: Revenue up by 116.37% YoY to Rs. 25,147.29 crore in Q1 FY23 from Rs. 11,622.41 crore in Q1 FY22.
  • South East Asian Operations: Revenue down by 26.37% YoY to Rs. 2,512.37 crore in Q1 FY23 from Rs. 3,411.95 crore in Q1 FY22.
  • Rest of the World: Revenue down by 25.16% YoY to Rs. 174.48 crore in Q1 FY23 from Rs. 233.14 crore in Q1 FY22.

What the management says about the results

Mr. T V Narendran, Chief Executive Officer & Managing Director: “This has been a challenging quarter for the Global and Indian economy with rising interest rates, supply chain constraints and slowdown in China due to COVID. Despite these multiple headwinds, Tata Steel has delivered a strong performance with an improvement in margins. Our strong marketing franchise and superior business model in India enabled us to successfully pivot and increase our domestic deliveries to counter the 15% duty imposed on steel exports in the middle of the quarter. We continue to drive value accretive growth in India backed by investments in customer relationships, brands and distribution networks and remain well positioned to benefit from the buoyant automotive & retail housing demand and the government spend on infrastructure. Our European business delivered a sharp improvement in performance as long term contracts and product mix helped drive a strong increase in realizations. We are geared towards commissioning the 6 MTPA pellet plant at Kalinganagar in 3QFY23 which will drive cost savings followed by the CRM complex and the 5 MTPA expansion project. Our subsidiary, Tata Steel Long Products, has completed the strategic acquisition of Neelachal Ispat Nigam Limited and will drive growth of our long products business. We continue to progress on our sustainability journey and are committed to being net zero by 2045. We are also focused on making Tata Steel more diverse & inclusive and were ranked 3 rd among manufacturing companies by Great Place to Work in India.”

Other things to know about Tata Steel

  • The 6 MTPA Pellet plant at Kalinganagar will be commissioned in Q3 FY23, followed by the Cold Roll Mill complex and the 5 MTPA expansion. 
  • Tata Steel Long Products, a subsidiary of Tata Steel, has completed the acquisition of Neelachal Ispat Nigam Limited on 4th July 2022. 
  • Tata Steel is among the most geographically diversified steel producers in the world and is one of the top global steel companies with an annual crude steel capacity of 34 million tonnes per annum and has operations and commercial presence across the world.

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Research Analyst: Bavadharini KS

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