Tata Steel Q3 Results: Net Profit Falls 19.7% Sequentially But Beats Estimates; Costs Rise

Tata Steel Ltd.'s third-quarter profit declined but beat estimates sequentially even as coal costs rose.

The steelmaker's consolidated net profit slid 19.7% over the preceding quarter to Rs 9,572.6 crore in the three months ended December, according to an exchange filing. That compares with the Rs 9,017.7-crore consensus estimate of analysts tracked by Bloomberg.

Net profit more than doubled over a year earlier.

Other Highlights (QoQ)

• Revenue rose 0.7% to Rs 60,783.1 crore. Analysts had estimated Rs 59,679 crore. Revenues were broadly stable as improvement in net realisations more than offset the drop in volumes.

• Operating profit declined 3.4% to Rs 15,893.6 crore, staying in line with the estimated Rs 15,268 crore despite a surge in international coal prices.

• Margins moderated to 26.1% versus 27.3%. The estimate was 26%.

• Total expenses rose 3% quarterly to Rs 48,666 crore.

Domestic deliveries rose 2% sequentially and in the first nine months of the financial year, driving improvement in product mix. Sales volume of branded products and retail and industrial products and projects segments improved sequentially. Automotive sales remained flat even as output fell 9% sequentially.

Tata Steel Q3FY22 (Consolidated, YoY)

• Revenue up 44.9% at Rs 60,783.1 crore.

• Net profit up 158.9% at Rs 9,572.7 crore.

• EBITDA up 66.1% at Rs 15893.7 crore.

• Margin at 26.14% vs 22.8%.

India steel demand has begun to improve on the back of continued economic recovery as the third wave of Covid begins to ebb, TV Narendran, chief executive officer and managing director at Tata Steel, said in the statement. Steel deliveries in India expanded and the company performance in key segments such as auto was robust despite the semiconductor shortage, he said. European operations continue to perform, underpinned by strong improvement in realisations, Narendran said.

Other Highlights

• Consolidated free cash flow was Rs 6,338 crore despite an increase in working capital of Rs 2,045 crore.

• The company spent Rs 2,790 crore on capex during the quarter

• Work at the pellet plant, cold roll mill complex and the 5 million tonnes a year expansion at Kalinganagar, Odisha is on.

Shares of Tata Steel closed 0.9% higher ahead of the results compared with a 0.25% fall in the S&P BSE Sensex.