Tata Steel Q4 Results: Profit Dips On Europe Woes, But Beats Estimates

Tata Steel Ltd.'s fourth-quarter revenue and net profit declined during the quarter ended March 2023, as a fall in Europe realisations partly offset the rise in India. The company, however, managed to beat estimates for all metrics by a wide margin.

The Indian steel major saw its consolidated net profit fall 82.53% year-on-year to Rs 1,704.86 crore, according to its exchange filing. The consensus among analysts tracked by Bloomberg had estimated a profit of Rs 330.37 crore.

The steel behemoth had reported a loss of Rs 2,223.84 crore in the December quarter of 2022 on higher raw material costs and rise in deferred tax expense. Both components went down sequentially during the period under review, the company said.

Tata Steel Q4 FY23 Key Highlights (Consolidated, YoY)

• Revenue down 9.18% at Rs 62,961.54 crore. (Bloomberg estimate: Rs 60,827.16 crore).

• Ebitda decreased 51.97% to Rs 7,219.20 crore. (Bloomberg estimate: Rs 5,711.28 crore).

• Ebitda margin estimate stood at 11.47% versus 21.68%. (Bloomberg estimate: 9.4%).

• Net profit fell 82.53% to Rs 1,704.86 crore. (Bloomberg estimate: Rs 330.37 crore).

The company claimed that its net debt has gone down by Rs 3,900 crore to Rs 67,810 crore, while "liquidity remains strong at Rs 28,688 crore".

"We were successful in maintaining our interest cost despite the 250 basis points increase in benchmark interest rates. Our financial metrices continue to be within our medium-term targets... We remain focused on cost optimisation, operational improvements and working capital management to maximise cash flows and will aim to resume our deleveraging journey in FY24," said Chief Financial Officer Koushik Chatterjee.

Tata Steel's India operations achieved their highest ever annual crude steel production of 19.88 million tonne, up 4.3%, during fiscal 2023, it said. Deliveries also reached their highest ever level in a year, rising 3.28% to 18.87 million tonne.

For the three months to March 2023, production grew 5.1% year-on-year to 5.15 million tonne, whereas deliveries inched up 0.6% to 5.15 million tonne.

"India business witnessed a margin improvement from 15% to 22% driven by improved realisations QoQ. In Europe, margins were broadly similar on a QoQ basis as improvement in costs was offset by drop in revenues, in part due to delay in ramp up of cold mill at Ijmuiden," said Chatterjee.

The board of Tata Steel recommended a dividend of Rs 3.60 per share for fiscal 2023.

The company's shareholders will convene on July 5, 2023, for an annual general meeting to vote on the dividend. If approved by the investors, the dividend will be paid on and from July 10, 2023, the company said in its statement.

Shares of Tata Steel closed 2.22% higher at Rs 110.30 apiece on Tuesday, as against a 0.4% rise in the benchmark BSE Sensex, which ended the day's trade at 61,354.71.