Tata Steel Q1 net profit beats estimates; approves Rs 33,873 crore capex

Tata Steel reported a near 12% year-on-year rise in consolidated net profit for the June quarter driven by a robust performance in its home market of India. The company also announced a capital expenditure of Rs 33,873 crore for expanding capacity at Neelachal Ispat Nigam Ltd (NINL).

The steelmaker’s consolidated profit of Rs 2,318.15 crore for the fiscal first quarter beat analyst expectations. In India, which includes its standalone operations and NINL, profit surged more than 35% on-year.

NINL, a wholly-owned unit of Tata Steel, is set to be merged in the company. Tata Steel had announced a plan to add 4.8 million tonne capacity to this plant in December but announced the investment details on Thursday.


“This will enable Tata Steel to further expand the long products portfolio, especially in the retail space where our branded products are in high demand,” it said in a statement.

Consolidated total revenue for the June quarter rose more than 14% on-year to Rs 60,412 crore, while earnings before interest, tax, depreciation, and amortisation (EBITDA) rose more than 25% to Rs 9,370 crore. Consolidated EBITDA made on each tonne of steel climbed to Rs 12,898 last quarter from Rs 10,503 a year earlier.

In India, revenue grew nearly 19% to Rs 36,989 crore, while EBITDA was 32% higher. The EBITDA made on each tonne of steel, meanwhile, rose to Rs 19,162 from Rs 15,760 a year ago.

“Global operating environment remained complex, with the impact of developments in West Asia on supply chains and input costs being more pronounced in the quarter,” said TV Narendran, chief executive. “Our overseas operations also had to navigate operational disruptions. Despite these headwinds, Tata Steel delivered a sequential improvement in EBITDA per ton for the third consecutive quarter.”

In Tata Steel Netherlands, the EBITDA per tonne fell sharply to Rs 279 from Rs 4,074 a year ago, while in Tata Steel UK, the operating loss narrowed to Rs 7,071 per tonne from Rs 7,829 a year ago.

“UK narrowed its EBITDA loss...reflecting the impact of targeted improvement initiatives and better pricing supported by trade measures,” said Koushik Chatterjee, chief financial officer. “This improvement was achieved despite operational disruptions arising from the unfortunate pickle line fire.”

“In Netherlands, the performance was impacted by the temporary shutdown of Direct Sheet Plant. We are progressing towards its restart in discussion with the local regulator,” he said.

Tata Steel spent Rs 3,579 crore on capital expenditure during the quarter. Its consolidated net debt rose to Rs 84,173 crore from Rs 80,144 crore a quarter ago, while net debt to EBITDA ratio stood at 2.29 times, flat compared to the previous quarter.

The company reported its earnings after market hours, and its shares closed almost unchanged at Rs 186.95 apiece on the BSE.