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Tata Steel more than doubles net profit for Q3 at Rs. 9,598 crores

04 February 2022
4 minutes

The country’s largest private sector steel manufacturer – Tata steel, delivered its results for the third quarter of FY22 on February 4, 2022.

In line with market expectations, Tata steel reported its consolidated net profit at Rs. 9,598 crores, a stellar growth of 159% YoY from Rs. 4,011 crores in the year ago period. The steel giant’s revenue from operations grew nearly 45% from Rs. 41,935 crores to Rs. 60,783 crores YoY.

The company’s consolidated EBITDA stood at Rs. 15,853 crores, up a mammoth 89% from Rs. 8,394 crores last year. Tata group confirmed that it spent Rs. 2,790 crores on Capex for this quarter. Net debt declined for the company, standing at Rs. 62,869 crores. As a result, Net Debt/EBITDA fell below 1.

For the India operation, crude steel production grew 2% QoQ and 4% YoY to 4.81 million tons. Auto OEM production dropped 9% due to semiconductor storage. For Europe business, revenues rose 7% QoQ and an impressive 56% YoY to £2,246 million in Q3.

Ahead of the results, Tata Steel shares closed ~0.67% higher, settling at Rs. 1,174 on NSE. Just in the past 12 months, the stock has gained nearly 71.43%.

Highlights

  • Consolidated revenues were recorded at Rs. 60,783 crores, broadly stable on QoQ basis
  • Consolidated EBITDA was published at Rs. 15,853 crores while PAT stood at Rs. 9,598 crores.
  • For the quarter, the company has spent nearly Rs. 2,790 crores on Capex
  • Net debt declined to Rs.62,869 crores for the quarter ended December
  • Net debt to EBITDA improved to below 1
  • Crude steel production rose by 2% QoQ and 4% YoY to 4.81 million tons
  • Sales volume to Automotive segment remained steady QoQ despite 9% drop in Auto OEM production
  • For Europe operations, revenues rose by 7% QoQ and 56%YoY to £2,246 million
  • To positively decrease carbon emissions, Tata Steel is in the process of conducting trials to inject Coal Bed
  • Methane gas into a blast furnace which will reduce coke consumption during steelmaking
  • The merger of Tata Steel BSL with Tata Steel has been successfully completed

From the management

Mr. T V Narendran, Chief Executive Officer & Managing Director, expressed in a press release that India’s steel demand has begun to improve on the back of continued economic recovery as 3rd wave of COVID begins to ebb. Tata’s steel deliveries in India expanded by 4% in the first nine months of the financial year along with an improvement in product mix.

He added that Tata shall continue to drive value accretive growth in chosen segments. Performance in key segments such as auto was robust despite the sector being impacted by the semiconductor shortage. European operations continued to perform underpinned by strong improvement in realizations. Tata Steel continues to progress on stated goals.

Mr. Narendran expressed that Tata Steel became the first company in the world to conduct trials to inject Coal Bed Methane gas into a Blast Furnace in a bid to reduce emissions. Tata’s 5 MTPA TSK phase II expansion including the pellet plant and CRM complex is also progressing well. This, the company believes, will enable them to significantly ramp up their long products portfolio and benefit from the growth in infrastructure in India and retail housing growth in semi urban India. Tata Steel will leverage their retail brands and pan India distribution network to drive scale, profitability and cash flows.

Other things to know about Tata Steel

  • Tata Steel certified ‘Great Place to ork’ for the fifth consecutive time.
  • The company received Safety & Health Recognition 2021 from World Steel Association.
  • The steel giant also featured amongst the top 10 companies in the steel industry in the Dow Jones Sustainability Indices (DJSI) Corporate Sustainability Assessment 2021.
  • Tata Steel deploys its first Biofuel powered ship for imported raw material transportation.
  • It also bagged the ‘Gold’ employer title in India Workplace Equality Index (IWEI) 2021.
  • Tata Steel executed the inaugural blockchain enabled trade between India and Bangladesh.
  • Tata Steel initiates a ‘first-of-its-kind in the world’ trial for continuous injection of Coal Bed Methane (CBM) in Blast Furnace to reduce emissions.
  • The company was declared as one of the joint winners as Top Innovative Company (Large) in the Manufacturing category at CII Industrial Innovation Awards 2021.
  • Asia’s first integrated private steel company, Tata Steel sits on a market cap of ~Rs. 1,43,772 crores, with a presence across the country.
  • It has a P/E of 4.61 as of 4th February, 2022.

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Research Analyst: Bavadharini KS

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