India’s steel giant – Tata Steel announced Q1FY19 results yesterday.The company reported increase in crude steel output by 4% on quarterly basis and domestic sales grew by 14% Y-o-Y in Q1FY19.
The investor conference call highlights are mentioned below.
1.Company’s standalone crude steel production increases by 4% in Q1FY19- Tata Steel’s registered the growth of 4% to 3.18 MnT in Q1FY19 as compared to 3.07 MnT in previous quarter.However on yearly basis the same went up by 8% in Q1FY19 against 2.94 MnT in Q1FY18.
2.Company’s steel deliveries inch down by 2% in Q1 FY19– Tata Steel India deliveries inch down by 2% Q-o-Q basis to 2.97 MnT in Q1FY19 which was 3.03 MnT in Q4 FY18. Although on yearly basis deliveries increased by 8% in Q1FY19 against 2.75 MnT in same time frame of previous year.
3.Company’s EBITDA for its India operations moved up by 6% in Q1FY19 – In India,Tata Steel EBITDA move up by 6% on quarterly basis.In Q1FY19 company reports EBITDA at INR 5,118 Cr as compared to 4,823 Cr in previous quarter.Also on yearly basis the same reported the growth of 75% in Q1FY19 against Q1FY18.
4. Fall in steel export volumes – Export volumes decline significantly by 36% to 0.16 MnT in Q1FY19 against 0.25 MnT in previous quarter.However on yearly comparison the same drop by 43% against 0.28 MnT in Q1FY18.Thus strong demand and higher realizations in domestic market has resulted to decline in exports volumes in this quarter.
5. Domestic sales grew by 14% Y-o-Y in this quarter- Domestic sales grew by 14% Y-o-Y to 2.81MnT in Q1 FY19 against 2.47 MnT in similar quarter of previous year.However on quarterly basis the same inch up by 1% against 2.78 MnT in Q1FY18.
6. Successfully completed acquisition of Bhushan Steel- Tata steel has successfully acquired Bhushan steel in May’18.Thus Bhushan steel,crude steel output stood at 0.91 MnT in Q1 FY19 and sales stood at 0.85 MnT.However in previous quarter Bhushan Steel’s production was at 0.97 MnT.
Current capacity utilization of Bhushan steel is 3 MnT and company is targeting to achieve 3.5-3.6 MnT this year and heading towards 4 MnT. And within 24 months company will ramp up the steel capacity utilization to 5MnT.
7.On sourcing iron ore from Tata Steel’s Khondbond to Bhushan Steel – Company officials have some pending clearances to be obtained with Odisha govt. to supply iron ore to Bhushan Steel.However in next few weeks company is hopeful that things will be done and we will be allowed to supply nearly 3MnT pa iron ore to Bhushan Steel.
8.Expansion plans at Kalinganagar plant: Kalinganagar Phase II expansion project for 5 MnT pa is making good progress.Total estimated project cost is INR23,500 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
9.Coking coal prices likely to be stable in coming quarter – It is anticipated that coking coal prices likely to remain stable in coming quarter against Q1FY19. Realizations is expected to be lower by INR 500/MT in Q2.However restrictions on coal imports at Chinese ports may affect trade balance.
Meanwhile iron ore prices are also anticipated to remain range bound.However premium for high grade iron ore and pellets to continue as Chinese producers show a strong preference for better grades.
10.Steel prices expected to remain range bound in near term-Company officials mentioned that,steel prices likely to remain stable in near term.However post monsoon prices may pick up in domestic market over strong demand.Meanwhile demand from automotive sector is expected to remain healthy. However in Q1FY19 steel demand grew by 9% on yearly basis amid strong growth in commercial vehicles,infrastructure and capital goods sectors.
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