India: Tata Steel Q3 net profit grows 2.5 times to INR 9,598 crore

Tata Steel, India’s largest private-sector steelmaker, delivered strong operating and financial performance in the third quarter of FY’22 (Oct-Dec’21). The company posted strong operating cash flows in the quarter despite a significant surge in international coal prices and increased working capital requirements.

Financial highlights

• The company’s net profit more than doubled to INR 9,598 crore in Q3FY’22 against CPLY.
• Consolidated revenue stood at INR 60,783 crore, up 45% from INR 41,935 crore reported in the same period a year ago. Revenue in the preceding quarter stood at INR 60,387 crore.
• Consolidated EBITDA (earnings before interest, tax, depreciation, and amortisation) stood at INR 15,853 crore for the quarter, higher by 64% from INR 9,652 crore in the same period a year ago. On a sequential basis, consolidated EBITDA declined by 5% from INR 16,618 crore. The company achieved a consolidated EBITDA per tonne of INR 22,663/t compared to INR 24,112/t achieved in the previous quarter.

India operations:

• Crude steel production from India stood at 4.81 mnt, an increase of 4% y-o-y and 2% q-o-q.
• Domestic deliveries increased by 2% q-o-q. Sales volume to the automotive segment remained steady despite a 9% drop in auto OEM production due to semi-conductor shortages.
• India operations reported an adjusted EBITDA of INR 12,434 crore and profit after tax (PAT) at INR 7,787 crore.
• Tata Steel Long Products, a subsidiary of TSL, won the bidding process to acquire 93.71% stake in Neelachal Ispat Nigam Limited. “Tata Steel Long Products has been declared the winning bidder for Neelachal Ispat Nigam Ltd. This will enable us to significantly ramp up our long products portfolio and benefit from the growth in infrastructure in India and retail housing growth in semi-urban India. We will leverage our retail brands and pan-India distribution network to drive scale, profitability and cash flows,” Narendran said.
• The company spent INR 2,790 crore on capex during the quarter. Further, the construction of the pellet plant, the cold roll mill complex and the 5 mtpa expansion at Kalinganagar are ongoing.

Europe operations

• TSL Europe continues to perform better underpinned by strong improvement in realisations. The Europe operations saw a growth of 56% y-o-y and 7% q-o-q in its revenue at GBP 2,246 million.
• EBITDA for the European business stood at GBP 290 million which works out to an EBITDA per tonne of GBP 134/t.
• In yet another step towards reducing carbon emissions, Tata Steel is conducting trials to inject coal bed methane gas into a blast furnace to reduce coke consumption in steelmaking. The trial will also provide useful insights regarding operation of blast furnaces with hydrogen-based injectants.

Outlook
Tata Steel said the fourth quarter business outlook remains stable despite volatile raw material prices.