Tata Steel published its quarterly reports on 11th November 2021 after the close of trading hours. The company results showed a considerable spike in PAT which increased nearly 6.5 times in the quarter under review. 

The consolidated PAT stood at Rs.12,548 crores in the July-September 2021 quarter, registering a 654% YoY growth from Rs.1665 crores which was reported in the July-September 2020 quarter. The consolidated PAT is up 28% from Rs.9768 crores reported in the previous quarter of this financial year.

The consolidated EBITDA also jumped 222% YoY to Rs.17,810 crores in Q2 FY22 from Rs.5527 crores reported a year ago in Q2 FY21. There is a growth of 12% on a sequential basis. This consolidated quarterly EBITDA is the highest ever growth registered by the company till date. This has resulted in the company achieving investment grade metrics. Subsequently, the credit rating of Tata Steel has been enhanced by S & P Global and the company is now rated ‘BBB-‘ with a stable outlook. 

During the quarter under review, Tata Steel reported working capital requirements at Rs.3889 crores. It also paid out Rs.3020 in dividends to its shareholders. However, despite these major expenses, the consolidated free cash flow of the company stood at Rs.3322 crores in Q2 FY22.

The consolidated turnover of the company jumped 55% YoY to Rs.60,283 crores in the second quarter of the current financial year compared against Rs.38,940 crores reported in the second quarter of the last financial year. The reason for the increase was the enhanced steel realisation globally and higher deliveries in India.

On Thursday, 11th November, when the markets closed, Tata Steel’s share price closed at Rs.1298.95 after a 0.03% jump intraday. The company had earlier declared a dividend of Rs.25 per share on 5th May 2021.

TATA Steel Quarterly Results Q2 FY22 – Hits

  • 654% YoY growth in the consolidated PAT, from Rs.1665 crores to Rs.12,548 crores. Quarterly, the consolidated PAT grew 28%
  • 222% YoY jump and 12% QoQ jump in the consolidated EBITDA. In Q2FY22, the EBITDA was recorded at Rs.17,810 crores
  • Increase in the credit rating of the company to ‘BBB-‘ with a stable outlook
  • 55% YoY increase in the consolidated turnover, from Rs.38,940 crores to Rs.60,283 crores
  • Reduction in gross debt to Rs.78,163 crores. The net debt also reduced and stood at Rs.38,860 crores
  • Net debt to EBITDA and net debt to equity ratios improved. They stood at 1.21x and 0.79x respectively

Tata Steel Results for Q2 – Sector-wise performance 

  • Crude steel production – 2.2% QoQ and 3.1% YoY growth to stand at 4.73 mn tons
  • Overall deliveries – 11% QoQ growth to stand at 4.58 mn tons
  • Tata Steel Standalone – 4% QoQ growth and 2.3 times YoY growth
  • Tata Steel Europe – revenues increased 50% YoY and 11% QoQ to amount to GBP 2108 million
  • Automative segment – 18% QoQ growth in the sales volume 
  • Infrastructure and engineering – 19% QoQ growth in sales. The highest ever quarterly sales were recorded in this segment
  • The Tata Steel BSL merger into Tata Steel has been approved by NCLT

Management commentary

V. Narendran, the CEO and MD of Tata Steel said that the company delivered exceptional growth despite the seasonally weaker quarter. He said that steel delivery in India increased 11% even though the market demand contracted. This shows the strength of the company. 

He also said that the company is continuing to drive value accretive growth in the selected segments. The company’s performance in the key segments, like the auto segment, was robust even though there was a shortage of semiconductors. The company’s European operations have also performed well because of strong improvements in realisations. He said that the company is keeping a watch on high energy costs and increased coal prices as they pose key risks to the profit margins in the coming months.

Tata Steel in the News

Here are some important highlights of the projects that the company has tied-up with in recent months –

  • The company commissioned 5 TPD carbon dioxide capture plant at Jamshedpur. This is first initiative by any steel company in India to extract carbon dioxide directly from the blast furnace gas
  • Tata Steel has commissioned 300 KLD water treatment plant at Noamundi, Jharkhand
  • Launched new rebar Tata Tiscon 550SD for its retail customers

Other things to know

  • The company’s capex during the quarter amounted to Rs.2191 crores
  • The company has finished 100% of its divestment in NatSteel Holdings Private Limited located in Singapore
  • Tata Steel stock has a P/E ratio of 4.69, lower than the industry average of 8.65, indicating that the stock has potential. 
  • Being an infrastructure-heavy company, the stock has a book value of  617 and an EPS (TTM) of Rs.276.