India’s steel giant – Tata Steel announced Q2FY19 results yesterday.The company achieved best ever performance in this quarter after 6 years post acquisition of Bhushan Steel. Tata Steel reported 7% increase in deliveries on quarterly basis and Bhushan steel deliveries jumped by 34% Q-o-Q in Q2FY19.
The investor conference call highlights are mentioned below.
1. Standalone crude steel output up by 3% Q-o-Q basis- Tata Steel’s crude steel output went up by 3% on quarterly basis to 3.26 MnT in Q2FY19 as compared to 3.18 MnT in previous quarter.However on yearly basis the same went up by 2% against 3.20 MnT in Q2FY18.
2. Steel deliveries surge by 7% in Q-o-Q- Tata Steel India deliveries surge by 7% Q-o-Q basis to 3.18 MnT in Q2FY19 which was 2.97 MnT in Q1FY19. On yearly basis deliveries increased by 3.2% in Q2FY19 against 3.08 MnT in Q2FY18.
3. Export deliveries boost by 50% in Q2– Tata steel export sales recorded significant surge in export volumes by 50% to 0.24 MnT in Q2 which was 0.16 MnT in previous quarter. Meanwhile auto sales grew by 21% Y-o-Y and branded products sales contributed 41% of total sales in Q2.
4. Bhushan Steel deliveries jumped 34% Q-o-Q- In Q2FY19, Bhushan steel deliveries jumped by 34% Q-O-Q to 1.14 MnT against 0.85 MnT in previous quarter backed by better realizations and improved market strategy that helped in inventory reduction. However crude steel output remain largely stable at 1.05 MnT in Q2. Meanwhile EBITDA for the quarter increased by INR 1,713 Cr in Q2 against previous quarter.
5. Company’s EBITDA rose by 20% Q-O-Q- In India,Tata Steel EBITDA move up by 20% on quarterly basis.In Q2FY19 company reports EBITDA at INR 6,113Cr as compared to INR 5,118 Cr in previous quarter. EBIDTA/t increased to INR 19,244 cr in Q2 FY19.
6. Acquisition with Usha Martin to increase product basket for long products-Tata Sponge Iron Limited,a subsidiary of Tata steel signed definitive agreements for acquisition of steel business of Usha Martin Limited comprising 1 MnTPA long products manufacturing capacity,an operating iron-ore mine, an underdevelopment thermal coal mine and captive power plants.Besides this,company has acquired 100-150 acre of spare land which will have adjacent facilities.
7. Tata Steel Kalinganagar Phase 2 expansion on track – Company is planning to expand 5 MnT capacity for which work has been started. Total estimated project cost is Rs.23,500 crores, including Rs.16,000 crores up to HRC stage.The project also includes raw material handling facilities, a state-of-the-art 2.2 MTPA cold rolling complex and other downstream facilities.The project is estimated to complete by FY 2022. Bhushan Steel has already started supplying 40,000 MT of slabs to Kalinganagar plant which are being processed to CRC via hot strip mill in Q2.
8. Steel Prices likely to remain flattish in Q3- On quarterly average basis, steel prices in domestic market are likely to remain range bound in coming quarter. As on average basis also steel prices inch up marginally by INR 400-500/MT in Q2 as compare to Q1. Meanwhile landed cost of HRC coming to India is around INR 44,000-45,000/MT amid significant drop in global steel prices.
However on the other hand slowdown in steel exports have kept supply tight in domestic market.In short domestic market sentiments remained balanced amid improving demand coupled with depreciating rupee and range-bound raw material prices.Also, coal prices increased in Oct-Nov which is also expected to remain firm.
9. Likely to increase iron ore supply to Bhushan Steel – Tata Steel supplied 100,000 MT iron ore from its captive mines to Bhushan in Q2, which is expected to increase to 300,000-400,000 MT in Q3
10. Clarity on Bhushan Power Acquisition is on progress- Tata Steel has already quoted bids for Bhushan Power having steel making capacity of 3.5 MnT.Tata steel is also planning to acquire Bhushan Power and Steel to increase the share of long products. However the case is still in court and next hearing is scheduled on 3rd Dec’18.
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