Tata Steel turns corner, Q3 net at Rs 232cr; India biz grows 39%

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Tata Steel
turned profitable in October-December quarter, with net income on consolidated basis at Rs 232 crore against loss of Rs 2,747.7 crore in year-ago quarter driven by strong operational performance.

Revenue during the quarter grew by 14 percent year-on-year (up 7 percent sequentially) to Rs 29,391.6 crore on account of strong growth in Indian operations.

“India revenue jumped 39 percent to Rs 14,106 crore and its EBIT (earnings before interest and tax) more than doubled to Rs 3,392 crore (from Rs 1,619 crore) year-on-year,” the company said in its filing.

Consolidated steel deliveries during the quarter increased 5.2 percent to 6.11 million tonnes from 5.81 million tonnes in same quarter last year.

“India steel deliveries grew by 14 percent sequentially and 27 percent YoY to 2.99 million tonnes, outperforming the domestic markets which grew by 3 percent sequentially and contracted by 2 percent YoY,” Tata Steel said.

The growth was also driven by Kalinganagar Steel plant that crossed 1.5 million tonnes of hot metal and 1 million tonnes of hot rolled coil production since commissioning in May 2016.

Operating profit on consolidated basis shot up 322.16 percent to Rs 3,539 crore and margin expanded by 880 basis points to 12 percent year-on-year, on the back of supportive realisations, strong growth in deliveries and ramp-up of Kalinganagar plant.

“Focus on cost improvement initiatives and integrated operations helped the company to contain the impact of rising raw material prices,” TV Narendran, Managing Director, Tata Steel India and South East Asia said.

Numbers were far ahead of analysts’ estimates. Profit was expected at Rs 100 crore on revenue of Rs 29,000 crore and operating income was estimated at Rs 3,100 crore with margin at 10.7 percent for the quarter, according to analysts polled by CNBC-TV18.

Tata Steel said performance of ferro alloys & minerals division registered sharp improvement on improved market conditions. Operating profit of the division at Rs 302 crore was higher by Rs 141 crore sequentially and by Rs 267 crore YoY.

Revenue from its Europe business was lower by 6.3 percent at Rs 12,537 crore but EBIT came in at Rs 610.2 crore against EBIT loss of Rs 757 crore on year-on-year basis.

Liquid steel production of 2.68 million tonnes was about flat on sequential basis, but 4 percent lower than Q3 FY16. Steel deliveries of 2.37 million tonnes were 3 percent higher sequentially, but 13 percent lower year-on-year following the strategic decision to focus on higher-value added products in UK.

South East Asia operations grew by 11 percent YoY to Rs 1,985 crore on improved deliveries at Tata Steel Thailand and supportive realisations. EBITDA increased by 82 percent sequentially and 138 percent YoY on better spreads, reflecting improved market conditions at both NatSteel & Tata Steel Thailand.

During the quarter, other income increased 32.1 percent year-on-year to Rs 130 crore while finance cost jumped 40.5 percent to Rs 1,387.4 crore and tax expenses shot up 110 percent to Rs 698.4 crore.

Tata Steel said board of directors had elected N Chandrasekaran as its chairman.