Tata Steel Q3 net profit more than doubles to ₹9,572 cr

The steel major’s revenue from operations rose 45% to ₹60,783 crore for the period under review as as compared to ₹41,935 crore in the year-ago period. Sequentially, revenues were broadly stable as improvement in net realisations more than offset the drop in volumes.

On Friday, ahead of the results, Tata Steel shares closed 0.67% higher to settle at ₹1,174 apiece on NSE. In the last one year, the scrip has gained by 71.43%.

The company clocked consolidated EBITDA (earnings before interest, tax, depreciation and amortisation) at ₹15,853 crore during the third quarter.

“India steel demand has begun to improve on the back of continued economic recovery as third wave of Covid begins to ebb. Our steel deliveries in India expanded by 4% in the first nine months of the financial year along with an improvement in product mix,” said Tata Steel CEO and MD T V Narendran.

“We continue to drive value accretive growth in our chosen segments and outperformance in key segments such as auto was robust despite the sector being impacted by the semiconductor shortage,” he said.

In the India operations, crude steel production increased by 2% quarter-on-quarter and 4% year-on-year to 4.81 million tons. Meanwhile, domestic deliveries increased by 2% sequentially.

Sales volume to automotive segment remained steady quarter-on-quarter despite 9% drop in auto OEM production due to semiconductor shortages.

For the Europe business, revenues increased by 7% quarter-on-quarter and 56% year-on-year to £2,246 million in the third quarter. EBITDA was £290 million which translates to an EBITDA per ton of £134.

Narendran said the company’s European operations continued to perform underpinned by strong improvement in realizations.

During the quarter, consolidated free cash flow was ₹6,338 crore despite an increase in working capital of ₹2,045 crore.

The company has spent ₹2,790 crore on capex during the quarter, while the work on the Pellet plant, the Cold Roll Mill complex and the 5 MTPA expansion at Kalinganagar is ongoing.

Meanwhile, gross debt decreased to ₹72,603 crore at the end of the 31 December with repayments of ₹17,376 crore in nine months period.

Net debt declined to ₹62,869 crore, while net debt to EBITDA improved to below 1 and net debt to equity improved to 0.68x.

“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 cashflows,” Narendran further said.

Tata Steel continued to deliver strong operating and financial performance and the company posted strong operating cash flows in the quarter despite a significant surge in international coal prices and increased working capital requirements. Tata Steel continues to remain focused on its enterprise strategy to deleverage its balance sheet while it pursues its growth priorities, said Tata Steel Executive Director and and CFO Koushik Chatterjee.

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

The company sees ₹10,000 crore-12,000 crore capex spending for the current financial year.