Steel major Tata Steel on Wednesday reported a return to profit in March quarter at consolidated net profit of Rs 6,644 crore as against consolidated net loss of Rs 1,481 crore a year ago. The bumper profit stems from the economic recovery seen after a nationwide lockdown drove a rebound in steel consumption and prices rallied globally.
Consolidated revenue rose 39% to Rs 49,977 crore as against Rs 36,009 crore a year ago. The company said in Q4FY21 it achieved its highest ever quarterly crude steel production of 4.75 mn tons. Steel deliveries grew 16% y-o-y to 4.67 mn tons in Q4FY21. The company achieved its highest ever quarterly EBITDA of Rs 12,295 crore with 40% q-o-q and 2.7x y-o-y growth in Q4FY21. This translates into an EBITDA per ton of Rs 26,309 and an EBITDA margin of 40.9%. FY21 EBITDA was Rs 28,587 crore.
The company's board recommended a dividend of Rs 25 per share.
"First half of financial year 2021 was a challenging period with the uncertainties and complexities brought on by the
COVID-19 pandemic. Indian economy and domestic steel demand has been improving since then with accommodative policies, government spending and relaxation in mobility restrictions. Despite a slow start in first quarter, we managed to deliver strong performance in India with broad-based, market-leading volume growth supported by our agile business model. All our segments, especially automotive, have performed extremely well due to our continuous focus on building strong customer relationships, superior distribution network, brands, and new product developments.
"We are also making good progress on our various initiatives to de-risk the business while our digital marketing platforms are helping us reach new markets and be future ready. The second wave of COVID-19 in India is a risk and we are working to minimize the impact on our employees and communities while meeting the requirements of our customers," said T V Narendran, CEO & Managing Director, Tata Steel.
"The fourth quarter performance has been stand out in terms of both earnings and cash flows, and helped the company to report one of the highest underlying performance for the full year in spite of the pandemic related disruptions during the first half of the financial year. The quarterly consolidated EBIDTA of Rs 14,290 crores and free cash flows after capex of about Rs.8,800 crores demonstrates the strength of the India business which had an EBIDTA margin of 41%. With disciplined capital allocation and tight working capital management through the year, Tata Steel’s full year free cash flow after capex was around Rs 24,000 crores.
"We have reduced our gross debt by over Rs 20,000 crores during the quarter and full year de-leveraging was about Rs 28,000 crores. As a result, the year-end net debt was Rs 75,389 crores which is 28% lower compared to the previous year end. The aggressive prepayment of debt has resulted in a sharp improvement of the capital structure metrics with the Net Debt / Equity under 1x and Net Debt / EBITDA at around the long term target level of 2.44x," said Koushik Chatterjee, Executive Director and CFO, Tata Steel.
Shares of the company on Wednesday ended at Rs 1,068.95 apiece, up 0.46 per cent on BSE, extending this year’s rally to 66%.
Analysts have 27 buy recommendations on the stock, 4 hold and 1 sell, according to data compiled by Bloomberg.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU