Tata Steel Q1 Just the Spark, Re­bound to Gain Strength

The Economic Times - - Companies: Pursuit Of Profit -

Tata Steel June Quar­ter Per­for­mance (` crore) Re­gion Wise break-up 12% in the quar­ter, even though turnover rose to ₹ 14,422 crore from ₹ 10,323 crore. Stan­dalone EBIDTA in­creased 31% to ₹ 2,922 crore.

The stock crossed Rs 600 for the first time in six years, re­flect­ing the Street’s con­fi­dence in the com­pany’s turn­around ini­tia­tives.

“The Tata Steel Group wit­nessed an in­crease of 19% in rev­enues over last year due to in­creased ca­pac­ity in In­dia and on­go­ing re­struc­tur­ing in Europe. Raw ma­te­rial prices were volatile, par­tic­u­larly cok­ing coal, which rose up to $220/ tonne in April, and has since moved to the $150-$180/tonne range. A mar­ginal de­cline in steel prices in Europe is ex­pected to lead to lower spreads in sec­ond quar­ter,” said Koushik Chat­ter­jee, group ex­ec­u­tive direc­tor (fi­nance and cor­po­rate).

Ina­post-earn­ingscall­withthe­an­a­lysts,the­m­an­age­ment­main­taineda pos­i­tive out­look for In­dian as well as Euro­pean op­er­a­tions, cit­ing New Delhi’s thrust on in­fras­truc­ture and af­ford­able hous­ing. Struc­tural re­forms in China would also likely ben­e­fit Tata Steel, although the ris­ing ru­pee is a likely risk. South­east Asian busi­ness for Tata Steel may re­main sub­dued in the medium term due to higher com­pe­ti­tion.

Against this back­drop, earn­ings should in­crease by about 20% be­tween FY17 and FY20.

An­a­lysts ex­pect in­cre­men­tal vol­ume growth from the Odisha plant and brown­field ex­pan­sion in the Jamshed­pur plant. “A smooth ramp up of Kalin­gana­gar fa­cil­ity helped us in­crease vol­umes and mar­ket share,” said T V Naren­dran, manag­ing direc­tor Tata Steel In­dia and S E Asia.

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