Tata Steel posts ₹1,017 crore Q2 profit, misses estimates
MUMBAI: Tata Steel Ltd reported a profit in the fiscal-second quarter from a loss in the year-ago period, but its earnings missed analysts’ estimates by a wide margin.
The company reported a consolidated net profit of ₹1,017.8 crore in the three months ended September 30. That compares with the ₹1,663 crore profit estimate by analysts in a Bloomberg survey. In the same quarter last year, Tata Steel had reported a loss of ₹49.4 crore.
The main reason behind the company missing estimates is that, Tata Steel’s earnings before interest, taxes, depreciation and amortisation (Ebitda) of ₹4,725.8 crore during the quarter came in well below analysts’ expectations of ₹5,235 crore despite rising by 52.8% from the year-ago period.
The Ebitda margin widened 320 basis points to 14.6% from a year earlier on lower raw material costs. A basis point is onehundredth of a percentage point.
Tata Steel, however, managed to meet revenue estimates by reporting a 19.7% jump from the year-ago period to ₹32,464.1 crore. Sales volume jumped 15% from the year-ago period to 6.45 million tonnes.
The company said it had made the £550 million payment to the British Steel Pension Scheme (BSPS) during the quarter and accounted for it under other comprehensive income.
Tata Steel said Ebitda in its standalone India business rose 71% from the year-ago period to ₹3,408 crore and was a function of both higher volumes as well as realisations.
The company said sales volume in its European operations rose 15% from a year earlier due to improvements in the supply chain and some one-off sales. European revenue rose 32% yearon-year, while Ebitda fell 29% to £89 million due to lower spreads and higher raw material prices.
Tata Steel said its gross debt rose by about ₹2,447 crore during the quarter and stood at ₹90,259 crore, mainly due to working capital requirements and foreign exchange lines. The company incurred a capital expenditure of ₹1,834 crore during the quarter.