Tata Steel Q3 results: Profits soars 2.5 times on-year, beats estimates

Tata Steel

Profit increased: Tata Steel has reported a robust rise in net profit in Oct-Dec 21 period, driven by higher prices, and a favorable product mix. The company's net profit more than doubled and stood at Rs 9,598 crore, beating analyst estimates. Analysts had earlier estimated a profit of about Rs 9,017 crore. The company had reported a profit of about Rs 4,011 crore in the same period last year. Sequentially, the profit is down from Rs 12,458 crore.

Revenue rises: Revenue rose to Rs 60,783 crore, up 45% on-year. Analysts had expected a profit of about Rs 59,679 crore. Sequentially, the revenue was up by 0.7%. Revenues were broadly stable as improvement in net realizations more than offset the drop in volumes.

Tata Steel results: Highlights

Operating profits and margins: Despite the surge in international coal prices, the operating profit was in line with analysts' estimate of Rs 15,268 crore and stood at Rs 15,893.6 crore, a decline of 3.4% sequentially. YoY, it is 64% higher. 

The EBITDA margins came down by 120 basis points at 26.1% compared to 27.3% in the previous quarter. Net margins for the quarter stood at 15.8%, which improved significantly from the 9.6% net margin achieved last year. On a sequential basis, however, there was a deterioration of 500 bps in net margins from 20.8%.

Debt reduction: Gross debt for the quarter fell to Rs 72,603 crore. The company made repayments of Rs 17,376 crore in the first nine months of the year. Net debt declined to Rs 62,869 crore, with net debt to Ebitda improving to below 1.

India business doing well: The crude oil production increased by 2% QoQ and 4% YoY. Sales volume to Automotive segment remained steady QoQ despite 9% drop in Auto OEM production due to semiconductor shortages. Quarterly adjusted EBITDA stood at Rs 12,434 crore and Profit after tax stood at Rs 7.787 crore

Update from Europe business: For Q3FY22, the revenue increased 7% QoQ and 56% YoY and stood at £2,246. The EBITDA in the December quarter came at £290 million.

The share price closed at Rs 1,174 per share on Friday afternoon.

Tata Steel results: Review

Tata Steel has reported an exceptional set of numbers both in topline and bottomline when you compare YoY. However, sequentially, the bottomline is lower and even the margins have declined. The company incurred a CAPEX of Rs 2,790 crore during the quarter and continues to remain focused on its enterprise strategy to deleverage its Balance Sheet while it pursues its growth priorities.