Tata Steel Ltd.’s second quarter consolidated net profit rose to ₹3,116 crore, the highest in nine years, compared with a net profit of ₹1,018 crore in the year-earlier period on higher steel prices and consolidation of Bhushan Steel results.
The steelmaker reported a 34% growth in turnover to ₹43,544 crore.
Consolidated deliveries grew 15% during the quarter to 7.42 million tonnes due to its focus on the domestic market, where a government push to improve infrastructure has raised demand.
India deliveries now contributes 58% of the total group deliveries.
Company’s consolidated EBITDA almost doubled to ₹9,000 crore compared with EBITDA of ₹4,644 crore in the year-earlier period.
Commenting on the results, T. V. Narendran, chief executive officer and managing director, said: “Tata Steel Group has delivered extremely strong results this quarter driven by robust operational performance and favourable business conditions in India. This quarter, despite a seasonally weaker period, we sold 4.32 million tonnes across Tata Steel standalone and Bhushan Steel. T his demonstrates our strong customer relationships and the strength of our marketing franchise. We continue to work on our strategy of increasing our Indian footprint as we ramp up operations at Bhushan Steel and implement our 5mtpa expansion at Tata Steel Kalinganagar.”
The liquidity position of the group remains robust at ₹26,470 crore, said a company statement, adding that gross debt during the quarter increased by ₹2,065 crore primarily due to adverse forex impact of ₹3,528 crore.
Koushik Chatterjee, executive director and CFO, said, “This has been one of the best-ever quarters for Tata Steel India on the back of strong operating and market performance with the EBIDTA margin of 34% and in excess of ₹19,000 per tonne and a profit after tax of ₹3,268 crore. The Bhushan Steel integration and synergies have been on track and that is reflected in the Bhushan Steel EBIDTA margin of ₹10,291/t. On the back of a strong India performance, the consolidated results of the company for the quarter reported 20% EBIDTA margin despite a operationally weak quarter in Tata Steel Europe due to unplanned shutdowns and stoppages both in Ijmuiden and Port Talbot.”
Tata Steel Europe
Liquid steel production at Tata Steel Europe was lower by 7% at 2.43 million tonnes as the production was impacted by two unplanned outages at IJmuiden; and planned shutdowns for ongoing upgradation programme and annual maintenance of Port Talbot.
This resulted in a fall in EBITDA to ₹1,111 crore compared with ₹1,667 crore in 1QFY19.
European operations, which are in the process of being merged with Thyssenkrupp AG, face an in-depth probe over concerns that the deal could reduce competition.
When asked about the concerns, Mr. Chatterjee said “We will continue discussions with the European Commission to address concerns and secure approvals for the planned joint venture.”
Noel Vaz, analyst, IIFL Securities said: “Tata Steel clearly beating consensus estimates for Q2FY19 due to strong outperformance by the domestic steel businesses. Tata Steel India and Bhushan steel both reported an EBITDA/tn of ₹19,244 (expectation of ₹16,600/tn) and ₹10,291 per tonne respectively. Even overseas operations reported steady margins in the face of operational issues. Net Debt stood at ₹1.04 lakh cr, flat qoq. The strong performance of the domestic steel businesses (especially Bhushan) is likely to support the company’s deleveraging efforts going forward. Lower leverage would help reduce stress on the balance sheet and is likely to lead to potential re-rating of the stock.”
Tata Steel shares on the BSE closed up 1.07% at ₹589.15 in Mumbai market on Tuesday.
