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Tata Steel Q3 result | Company beats estimates, posts profit of Rs 3,989 crore with 1,380 bps operating margin expansion

In Europe, the underlying performance has improved quarter-on-quarter while the reported EBIDTA was negatively impacted by a few one-offs, said TV Narendran, CEO & Managing Director.

February 09, 2021 / 08:00 PM IST
 
 
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Tata Steel on February 9 reported a consolidated profit of Rs 3,989 crore for the quarter ended December 2020, driven by improved realisation-backed strong operating income. The loss in corresponding period was Rs 1,166 crore.

Consolidated revenue from operations grew by 11.5 percent year-on-year to Rs 39,594 crore in Q3FY21.

The numbers were ahead of analysts' estimates. Profit was estimated at Rs 3,408 crore on revenue of Rs 38,970 crore for the quarter ended December 2020, according to the average of estimates of analysts polled by CNBC-TV18.

"The recovery in the global and Indian economy has led to sharp improvement in steel demand in India. We pivoted our deliveries to domestic markets, to cater to the requirements of our local customers by reducing exports. All the segments, especially automotive, have performed extremely well supported by our continuous focus on strong customer relationships, superior distribution network, brands and new product developments," TV Narendran, CEO & Managing Director said.

In Europe, the underlying performance has improved quarter-on-quarter while the reported EBIDTA was negatively impacted by few one-offs, he added.

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Tata Steel Europe reported a 1.8 percent year-on-year growth in revenue at Rs 14,069.92 crore, but at EBITDA level, it posted loss of Rs 724.27 crore in Q3FY21 against Rs 956.30 crore in Q3FY20.

At the operating level, its consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) surged 160.7 percent to Rs 9,540 crore and margin expanded by 1,380 bps to 24.1 percent compared to corresponding period, with improved realisation across key entities.

"Consolidated free cash flow was Rs 12,078 crore during Q3FY21 and Rs 20,588 crore in the first nine months of the current financial year driven by strong operating performance, disciplined capital expenditure and working capital management," Tata Steel in its BSE filing.

The company continues to prioritise on capital expenditure. Tata Steel spent Rs 1,394 crore on capex during the December quarter.

The company also said it has decided to restart work on pellet plant and cold roll mill complex at Tata Steel Kalinganagar. Both the Pellet plant and Cold Roll Mill complex, once completed, will expand margin, it believes.

As a part of its enterprise deleveraging plan, Tata Steel said it had completed reduction of net debt by Rs 18,609 crore in the first nine months of the current financial year 2020-21.

During the third quarter, the company reduced the leverage by Rs 10,325 crore, it added. "As part of the continued de-leveraging strategy further deleveraging is being undertaken in Q4FY21."

As far as India operations are concerned, crude steel production remained strong at 4.60 million tonnes, registering a 3 percent YoY growth in Q3FY21, while domestic deliveries grew 4 percent YoY to 4.16 million tonnes and exports shrank below 11 percent of overall deliveries, said the company, adding sales witnessed strong momentum but was constrained by lower opening inventory.

India operations (which includes Tata Steel Standalone, Tata Steel BSL and Tata Steel Long Products on proforma basis) achieved the highest ever quarterly EBITDA of Rs 8,811 crore with 2.14 times YoY growth, driven by higher prices, better product mix, lower exports and operating efficiency initiatives, said the company. "This translates into an EBITDA per ton of Rs 18,931 and an EBITDA margin of 34.9 percent.

The company further said Tata Steel standalone achieved the highest ever quarterly EBITDA Rs 6,737 crore, registering a 78 percent YoY growth. This translates into an EBITDA per ton of Rs 20,175 and an EBITDA margin of 37.5 percent, it added.
Moneycontrol News
first published: Feb 9, 2021 08:00 pm

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