Tata Steel Posts .₹ 1,018-crore Profit in Q2, But Misses Street Es­ti­mates

The Economic Times - - Companies: Pursuit Of Profit - Vat­sala.Gaur @times­group.com

Mum­bai: Tata Steel har­nessed the steep­est global prices in more than five years to post prof­its in the three months to Septem­ber, but In­dia’s old­est maker of the al­loy fell short of Street es­ti­mates in a quar­ter that saw a set­tle­ment of the pen­sion li­a­bil­i­ties in its Bri­tish busi­nesses.

The steel­maker re­ported a net profit of ₹ 1,018 crore, com­pared with a loss of ₹ 49 crore in the same pe­riod last year. Mar­ket es­ti­mates hov­ered around ₹ 1,600 crore. Con­sol­i­dated EBITDA stood at ₹ 4,726 crore against mar­ket es­ti­mates of ₹ 5,200 crore.

Rev­enues, in line with con­sen­sus, stood at ₹ 32, 464 crore, up 20% over last year.

The set­tle­ment of £550 mil­lion to­ward the Bri­tish Steel Pen­sion Scheme was ac­counted through “other com­pre­hen­sive in­come” in the bal­ance sheet. How­ever, this ca- tegory does not af­fect EBITDA and PAT, but adds to the com­pany’s debt.

Gross debt rose ₹ 2,447 crore ow­ing to an in­crease in work­ing cap­i­tal lines and forex im­pact, tak­ing the to­tal at the end of the quar­ter to ₹ 90,259 crore.

Tata Steel, which has re­port­edly shown an in­ter­est in the dis­tressed as­sets of Es­sar Steel and Elec­tros­teels Steel, is bank­ing on the Thyssenkrupp ar­range­ment in Europe to delever its bal­ance sheet.

“Once the JV is im­ple­mented, there will be an im­pact on the group’s debt due to de-con­sol­i­da­tion in the bal­ance sheet,” group ex­ec­u­tive di­rec­tor Koushik Chat­ter­jee said.

The com­pany had an­nounced its long­pend­ing merger with Ger­man con­glom­er­ate Thyssenkrupp in Septem­ber to tide over losses in its Euro­pean unit. Out of its ₹ 7,000-crore capex guid­ance for the fis­cal, it spent ₹ 1,834 crore in the Septem­ber quar­ter and is cur­rently sit­ting on ₹ 19,800 crore in cash and cash equiv­a­lents.

“The group’s liq­uid­ity po­si­tion re­mains ro­bust,” the com­pany said in a state­ment.

“Tata Steel wit­nessed strong vol­ume growth dur­ing the quar­ter as the smooth ramp up of Kalin­gana­gar Steel plant, cou­pled with our strong mar­ket­ing fran­chise, en­abled us to in­crease our mar­ket share,” said MD TV Naren­dran. “We re­main pos­i­tive on the out­look of In­dia as en­cour­ag­ing gov­ern­ment re­forms are ex­pected to fa­cil­i­tate do­mes­tic in­vest­ment,” he said.

An­a­lysts cheered the com­pany’s fo­cus on the lo­cal busi­ness.

“The com­pany looks sta­ble on the do­mes­tic front, with the in­creased fo­cus from the man­age­ment on ex­pand­ing do­mes­ti­cally,” said Goutam Chakraborty, a met­als an­a­lyst with Emkay Global.

Con­sol­i­dated EBITDA stood at 4,726 crore against mar­ket es­ti­mates of 5,200 crore

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