Tata Steel Q1 net profit more than doubles to ~19 bn

Tata Steel, the country’s oldest steel producer, saw its bottom line more than double as it reported a consolidated net profit of ~19.34 billion for the quarter ended June 30.

The company had churned a profit of ~9.21 billion in the corresponding period last year.

“Better realisations and improved spreads lent firm support to the bottom line of the company,” Koushik Chatterjee, executive director and chief financial officer, told reporters.

Tata Steel’s top line in the period under review stood at ~378.33 billion, up 22 per cent from the same period last year on the back of improved deliveries, realisations and better performance across geographies. “The auto and branded products showed good growth during the quarter, which helped us have a strong top line,” said TV Narendran, chief executive officer and managing director of Tata Steel.

According to Bloomberg estimates, the top line of the company was seen at ~359.23 billion, while net profit was at ~27 billion. A yearover-year increase in expenses by about ~60 billion led to a lower-than-expected bottom line for the company.

“Though the other expenses segment looks significantly higher compared to last year due to some reversals, there is no abnormal increase in any of the expenses components. With a rise in revenue, costs are bound to go up,” said Chatterjee.

On a consolidated basis, the company’s Ebitda stood at ~65.59 billion in the June quarter as against ~49.39 billion in the same period last year. The 31 per cent Ebitda margin of Tata Steel margin were the highest in 20 quarters, said Narendran.

Going ahead, the company expects underlying steel demand to be strong, particularly in India. However, the rising trade tensions and its impact on the global economy is a cause of concern, said Narendran.

As on June 30, the company’s consolidated gross debt is about ~1,000 billion as Bhushan Steel acquisition increased debt by ~220 billion, said the management.

“We have had a good two months with Bhushan steel. Some of the synergies have started kicking in. We have started moving extra slabs to Kalinganagar from Bhushan. There is a lot of alignment going on. Bhushan is getting benefits of Tata Steel coal, shipping and benefits from marketing and sales of our company. At the same time, Bhushan has value added steel which is helping Tata Steel,” said Narendran.