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Notwithstanding the robust set of numbers reported by Tata Steel for the September quarter, the markets seemed unimpressed. However, the stock’s decline may have been an over-reaction and more to do with the broader market volatility.
The company’s consolidated revenue increased by nearly 35 per cent to ₹43,544 crore, while net profit more than tripled y-o-y to ₹3,116 crore. This was possible on the back of consolidation of Bhushan Steel into the group’s financials and better performance by Tata Steel’s domestic operations.
Strong realisations
The company reported strong standalone revenue of ₹17,902 crore for the quarter, a growth of 26 per cent year-on-year, driven by higher sales volumes and better realisations. While volumes increased by 3.2 per cent to 3.18 million tonnes, realisations improved by more than 20 per cent from about ₹45,000 to around ₹55,000/tonne. This led to higher operating profits for the company — an increase of 74 per cent y-o-y to ₹19,244 a tonne. Operating margins, too, rose to 34 per cent from 24 per cent a year ago.
Overseas sales declined by about 23 per cent y-o-y, mostly due to uncertain global conditions. However, it improved by 50 per cent compared to the previous quarter as a result of a weaker rupee.
European operations
Liquid steel production at European operations in the quarter (2.43 million tonnes, lower by 7 per cent y-o-y) was affected due to unplanned outages and annual maintenance. In addition, higher imports too have impacted sales. However, the operating profit contribution has increased by almost 50 per cent to ₹1, 111 crore from ₹732 crore a year ago on account of increased sales of value differentiated products.
Bhushan gave a leg up
This is the first quarter in which Bhushan Steel’s earnings were completely consolidated with Tata Steel’s consolidated numbers. Sales from Bhushan Steel grew by a reasonable 10 per cent to 1.14 million tonnes in the quarter. It contributed ₹5,862 crore and ₹1,173 crore to the revenue and operating profit of the group, respectively.
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