India’s second largest steel manufacturing company by market capitalization, Tata Steel posted its September quarter (Q2FY22) results on Thursday, 11 November 2021.
The company’s consolidated revenues (topline) stood at ₹60,283 crore, up 55% year-on-year. Despite high raw material prices, the company posted its highest-ever quarterly EBITDA, which stood at ₹17,810 crore. EBITDA margins stood at 29.5% vis-a-vis about 14% in the same period last year. Rising steel prices gave a lift to the company’s profits. Net profit stood at ₹12,548 crore, rising by 653% year-on-year.
.Tata Steel’s raw material costs rose due to the purchase of iron ore and coal. However, inventory gains were seen on account of rising steel prices.
Tata Steel’s Europe revenues witnessed a strong growth of 50% year-on-year, whereas rising raw material prices and energy costs kept the pressure on the company’s margins.
The company believes that the demand for steel in India will be strong in the second half of the financial year owing to the government infrastructure spending and better consumer demand.
Indian steel prices are also expected to increase on the back of improvement in demand and high coking coal prices.
Tata Steel’s gross debt now stands at ₹78,000 crore after the debt repayment of ₹11,400 crore. The debt-equity ratio, which was 0.9x in FY21, now stands at 0.8x. The company is targeting further debt reduction in this fiscal.
Further, the company is planning a capital expenditure of ₹6,000-8,000 crore in the second half of the current financial year.
The company's share price has risen by nearly 60% in the current financial year. On the other hand, the Nifty50 index has risen by almost 22% during the same period, which shows that Tata Steel has significantly outperformed the broader markets.
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