Tata Steel sales have hit a record high at 17.31 mn t in FY ’21 on the back of strong recovery in demand from end-users in H2. The volumes are up by 2% in comparison with 16.97 mn t in the previous fiscal, SteelMint learned from the recent press release in BSE filing. However, the same remained largely stable at 4.67 mn t in Q4 FY ’21 compared with 4.65 mn t in Q3.
Major key takeaways from the investors call held today are listed below:
1.Crude steel production declines marginally-The manufacturer crude steel output aggregated to 16.92 mn t in FY ’21, down by 7% as compared with 18.20 mn t a year ago. The reduced capacity utilizations in the H1 of the fiscal due to the COVID related lockdown weighed on the company’s output. On the other hand, the same went up by 3% in Q4 FY ’21 to 4.75 mn t highest ever quarter production as against 4.60 mn t in the previous quarter.
2.EBIDTA surges by 45% in FY ’21-The EBIDTA of the company has registered a growth of 45% to INR 21,952 Crores in FY ’21 contrasted against INR 15,096 crore a year ago. Tata Steel Ltd. also achieved the highest ever standalone EBITDA of INR 9,206 crore in Q4 FY ’21 compared to INR 3,661 crore in the same period last fiscal. The surge was driven by better-than-expected steel realization in major markets. Apparent steel consumption jumped by 19.5% y-o-y in Q4 on increased rural penetration.
3.Export volumes spike by 52% in FY ’21-The manufacturer exported 52% more of its steel produce in FY ’21 at 3.65 mn t contrasted against 2.40 mn t in FY ’20. Economic recovery on a global scale opened up avenues for exports when the domestic demand suffered due to the seasonal slowdown coupled with the selective lockdowns announced during Aug to Oct ’20. Also, on the quarterly basis the volumes increased by 4% to 0.51 mn t in Q4 compared against 0.49 mn t in Q3.
4.Delivery Automotive & Special Products segment crosses 2 mn t-The company has managed to maintain its leadership in the CV segment with a 38% market share. Moreover, the company has registered 2x growth in the auto component exports segment. Along with this the Tata Steel Long’s domestic market share has grown by 15% in FY ’21 as against 12% reported in FY ’20.
Tata Steel BSL also reported improvement in market share in the auto segment (5% in FY21 vs 4% in FY20) by offering new products and thereby increasing share of business with key customers. It also has developed and commercialized HR for wheels application in Q4 FY ’21 for a large auto OEM.
5.Continues to prioritize on Capex-With disciplined capital allocation and tight working capital management through the year, Tata Steel’s full year free cash flow after capex was around INR 24,000 crore. The company accelerated Capex allocation for the Pellet plant and CRM complex at Kalinganagar and restarted work on 5 MTPA expansion in Q4. The margins are expected to expand upon completion of both the pellet plant and cold roll mill complex.
6.Plans to reorganize and merge-TSBSL merger with Tata Steel is progressing ahead while the merger of Tata Metaliks and Indian Steel and Wire Products with Tata Steel Long Products is also underway. Also, the separation of Tata Steel’s Netherlands and UK operations is ongoing and the management would be in a more finite position to comment on the status of the same in the next two months.
7.Increasing presence in Oil and Gas segment-Deliveries in Oil and Gas sector grew 3.4x in FY ’21. TSL supplies to key prestigious projects which are as follows:
- Kochi Koottanad Bangalore Mangalore pipeline (100% share of business)
- Srikakulam Angul Pipeline Project (50% share of business.
- Kandla Gorakhpur LPG Pipeline (33% share of business)
The company ramped-up their commercial deliveries from Tata Steel Kalinganagar post successful development of X65 and X70 API grades.
8.Expansion projects-The Pellet plant and Cold Roll Mill complex at Kalinganagar is under construction. The 5mtpa expansion project has been restarted. Project is expected to be commissioned by around the second half of FY ’24.
Commenting on the results, Mr. T V Narendran, CEO & Managing Director of the company said, “First half of financial year 2021 was a challenging period with the uncertainties and complexities brought on by the COVID-19 pandemic. Indian economy and domestic steel demand have been improving since then with accommodative policies, government spending and relaxation in mobility restrictions. Despite a slow start in the first quarter, we managed to deliver strong performance in India with broad-based, market-leading volume growth supported by our agile business model. We continue to work on our strategic priorities to maximize shareholders value. Work on the pellet plant and CRM complex at Kalinganagar is progressing well. We have also restarted our 5mtpa expansion project which should be completed in FY ’24.”
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