India steel major-Tata Steel Limited (TSL), has recently announced its consolidated financial results for the quarter and nine months ended December 31, 2020. Profit beat the estimates and revenues hit a seven-quarter high on the back of higher prices, better product mix, lower exports and higher efficiencies.
Major takeaways of the investors call are listed below:
1.Crude steel production remained strong at 4.60 mn t-TSL registered a 3% y-o-y growth in its domestic crude steel output at 4.60 mn t in Q3 against 4.47 mn t in Q3 FY ’20. Production was marginally up by 0.2% q-o-q as the production had stood at 4.59 mn t in Q2 FY ’21.
2.Sales momentum was strong in Q3-Domestic deliveries sharply ramped up to 4.16 mn t which translates to an increase of 8% q-o-q and 4% y-o-y, primarily due to lower opening inventory post strong sales in Q2 FY ’21. Meanwhile, exports shrank below 11% of overall deliveries. Sales witnessed strong momentum but was constrained by lower opening inventory.
- Automotive & Special Products’ segment deliveries grew 48% q-o-q on the back of higher production by auto OEMs and increased presence with new product approvals while ‘Branded Products & Retail’ segment deliveries grew by 5% q-o-q.
- Tubes division achieved best ever quarterly deliveries with growth of 14% q-o-q and 13% y-o-y enabled by strong customers engagement and higher rural penetration
3.Highest-ever quarterly EBITDA at INR 9,540 cr in Q3-Tata Steel’s India business reported highest-ever quarterly EBITDA INR 9,540 cr in Q3, up 53% q-o-q against INR 6,217 cr in Q2 FY ’21. With improved realizations across key entities TSL posted 161% y-o-y growth against INR 3,659 cr in the year-ago period, driven by higher prices, better product mix, lower exports and operating efficiency initiatives.
4.Consolidated revenue rose to INR 39,594 cr in Q3-Total turnover stands at INR 39,594 cr in Q3, up 11% y-o-y compared to INR 35,520 cr in Q3 FY ’20. Meanwhile, on a quarterly basis, the company had registered revenue at INR 37,154 cr in Q2, up 7% q-o-q.
5.Consolidated PAT improved by 144% q-o-q-Tata Steel reported a consolidated net profit of INR 3,989 cr, up by144% q-o-q for the quarter ended in December, on the back of strong performance of the India business.
6.Consolidated Free Cash Flow stood at INR 12,078 cr in Q3-TSL’s consolidated free cash flow was assessed at INR 12,078 CR IN Q3 FY ’21 and INR 20,588 cr in 9M FY ’21 driven by strong operating performance, disciplined capital expenditure and working capital management.
7.Continues to prioritize on CapEx-Tata Steel focusses on its capital expenditure by spending INR.1,394 cr on CapEx during the third quarter of the current financial year. The Company has decided to restart work on the pellet plant and cold roll mill complex at Tata Steel Kalinganagar. The margins are expected to expand upon completion of both the pellet plant and cold roll mill complex.
8.Focusses on net debt reduction in Q3-Tata Steel has reduced its net debt by INR 18,609 cr in 9M FY ’21. During the third quarter, the company reduced the leverage by INR 10,325 cr. Gross debt reduced by INR 5,640 cr and INR 7,649 cr in Q3 FY ’21 and 9M FY ’21 respectively. Further reduction in gross debt of more than INR 12,000 cr is planned in Q4. INR 6,400 cr has been repaid till date for an additional deleveraging planned for Q4 FY ’21.
9.Plans to re-organize 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 in also underway. Also, the separation of TSE into TSN and TSUK is ongoing.
10.Progress on new marketplace initiatives-TSL developed 25 and commercialized 8 new products with applications across construction, automotive, tubes and pipes. Digital platform Aashiyana2 scaled up rapidly and generated gross revenue at INR 200 cr, up by 40% q-o-q and 134% y-o-y.
Commenting on the quarterly results, Mr. T V Narendran, CEO & Managing Director of the company said, “We pivoted our deliveries to domestic markets, to cater to the requirements of our local customers by reducing exports. All the segments, especially automotive, have performed extremely well supported by our continuous focus on strong customer relationships, superior distribution network, brands and new product developments. Given strong market conditions and our success with deleveraging, we have restarted work on the pellet plant and the CRM complex at Kalinganagar which will help in reducing costs and improving revenues.
In Europe, our underlying performance has improved quarter on quarter while the reported EBIDTA was negatively impacted by few one offs. We remain committed to arrive at a strategic and sustainable solution for Tata Steel Europe, though in the immediate term, we will focus upon business performance and cash flows.”
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