Tata Steel Results Q4 2022
Steel major in India, Tata Steel, announced its results on May 3, 2022.
Tata Steel reported a stable performance during the March quarter of FY22. The company reported a revenue of Rs 69,324 crore and a profit of Rs 9,835 crore. It grew by 39% and 37% y-o-y respectively during the March quarter of FY22.
This is mainly due to increased steel consumption during the quarter driven by the economic recovery. As per the company’s statement, the consumption increased around 4% q-o-q. Further, improvement in the automotive product especially passenger and commercial vehicles along with infrastructure and construction too helped. Similarly, Europe too has witnessed economic recovery aiding the company’s operations during the quarter.
However, raw material costs have seen a jump of 49% y-o-y during the recent March quarter. This is on the back of an increase in higher coking coal prices across. On the other hand, in Europe, this increase was offset by a decline in iron ore prices.
More about Tata Steel Q4 results
The EBITDA stood at Rs 15,174 crore in Q4 FY22 against Rs 14,290 crore same period last year. While the EBITDA margin improved 14%y-o-y, as a percentaget of revenue, it fell to 23% in the recent March quarter compared to 28% in Q4FY21. The input cost increase has put pressure on the margins of Tata Steel.
The EBITDA per tonne for the company Rs 19,832 crore in Q4FY22, while it was Rs 17,797 crore same period last year, registering a jump of 11% y-o-y.
Tata Steel repaid Rs 15,232 crore of debt and its net debt to EDITDA is at 0.8 times (FY22) versus 2.44 times (FY21). Net debt to equity was at 0.52 times in FY22 (0.98 times in FY21).
The company announced a dividend of Rs 51 per share and Rs 12.75 per partly paid equity share.
Further, it announced a stock split in the ratio of 10:1 where for every one share, the stock is split into 10 shares.
Highlights of Tata Steel Results
- Steel production of the company was at 19.06 million tonnes, a growth of 13% y-o-y (India operations).
- The company’s debt to equity ratio improved to 0.52 times in FY22 from 0.98 times in FY21
- Improvement in sales volume was witnessed across segments. Automotive was up 27% y-o-y, Branded Products and Retail up 11% y-o-y. Industrial products & projects were up 11% y-o-y during the March quarter.
- Europe business saw an increase in revenue by 54% y-o-y to Euro 8,876 million during the quarter
- Revenue and PAT increased by 39% and 37% y-o-y respectively during the March quarter.
Tata Steel Q4 Results – Misses
- Raw materials cost witnessed an increase of 49% y-o-y during the quarter
- EBITDA margin as a percentage of sales declined 23% in the Q4 FY22 from 28% last year.
Management comments
T V Narendran, Chief Executive Officer & Managing Director said that
Tata Steel Indian business showed broad-based growth across segments thanks to a wide distribution network and portfolio of brands. European operations delivered robust performance as the transformation programme undertaken helped to leverage the strong business environment. The company has pursued several initiatives to de-risk the business, particularly across procurement and supply chains.
Kalinganagar expansion is progressing well and will drive cost savings as well as product mix enrichment. The acquisition of Neelachal Ispat Nigam Limited will be closed in 1QFY23. The company will scale it up rapidly to drive the expansion of the retail business.
Koushik Chatterjee, Executive Director and Chief Financial Officer said that
Tata Steel closed the financial year with a consistent and record operating and financial performance. This is despite the significant surge in international coal prices and the inflationary impact of various commodities.
The company’s cash outflow for the Capex in the year was Rs 10,522 crores, which is well within its earlier guidance. Tata Steel has generated strong free cash flows of Rs 27,185 crores for the year despite higher working capital, taxes, and Capex.
To read the RA disclaimer, please click here
Research Analyst: Bavadharini KS