Tata Steel Q2 Updates: Domestic Production And Sales Rise While UK Business Dips

Tata Steel Ltd.'s domestic crude steel production rose by 5% year-on-year and sales grew 6% in the second quarter of the current fiscal, according to provisional business updates released late on Sunday.

Production stood at 5.27 million tons in the July-September period, compared to 5.02 million tons in the same period last year. India sales came in at 5.10 million tons, up from 4.82 million tons reported in the previous fiscal.

On a half-year basis, crude steel production was up 5% while sales increased by 4%, Tata Steel said.

Global Operations

The company's Netherlands liquid steel production stood at 1.68 million tons, up 41% year-on-year and broadly stable on a sequential basis.

As operations ceased at the remaining blast furnace at UK's Port Talbot last month, liquid steel production declined from 0.76 million tons to 0.38 million tons. Sales also dipped to 0.64 million tons from 0.73 million tons last year.

The steelmaker plans to invest GBP 1.25 billion in electric arc furnace technology at Port Talbot, which will allow for a more sustainable approach to steel production using UK-sourced scrap steel. Tata Steel expects to resume production by 2027 or 2028, focusing on low-CO2 steelmaking.

In September, Tata Steel India successfully commissioned India's largest blast furnace at Kalinganagar, which is expected to increase crude steel capacity to 26.6 million tons per annum.

The newly inaugurated plant will help Tata Steel enhance the plant's overall production capabilities along with fulfilling the growing demand of various industries, including automotive, infrastructure, power, and shipbuilding, it said.

Citi Research said it projects TSL Netherlands to report an Ebitda per ton of $7 compared to $37 in the first quarter, while UK's loss may expand to $300 per ton from negative $169.

Tata Steel share price closed flat at Rs 166.92 apiece on the NSE on Friday, compared to a 0.9% decline in the benchmark Nifty. The stock has risen 33% in the last 12 months and 20% on a year-to-date basis.

Fourteen out of the 33 analysts tracking Tata Steel have a 'buy' rating on the stock, eleven recommend a 'hold' and eight suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price target of Rs 168.7 implies a potential upside of 35%.