Tata Steel disappoints

about 2 years ago
No Image


Tatat Steel dropped to hit a new low today at Rs.365.10, a fall of almost 4.5%; it has recouped a but but remains in the red at Rs.367 levels currently.

Given the turmoil in the steel sector – a sharp rise in iron ore prices due to supply disruptions and elevated coking coal costs; steel spreads dropping by around US$ 80-100/ton in key markets, domestic steel prices falling to a 2-year low as global slowdown picks up pace, cost of raw material rises, auto sector in a state of complete slowdown and China, world’s 50% steel consumer showing a drop in demand, earnings from Tata Steel for Q1FY20 were expected to be disappointing.

And it proved right – though total consolidated revenue rose 1% (YoY) at Rs.35,947 crore, net profit for the quarter was down 64% at Rs.693 crore. EBITDA came in 15% lower at Rs.5377 crore while margins slumped 290 bps to 15.4%.

On a standalone basis, net profit was at Rs.1539 crore, down 34%. Tata Steel Europe showed a very poor show with revenue at Rs.14,495 crore, down 12% (YoY) but much lower than its Indian revenue at Rs.16,091 crore.

Tata Steel Europe’s EBIT was a mere Rs.62 crore, sharply down from Rs.1664 crore (Y0Y). The European performance was impacted shutdown and downtime in Netherlands. The UK operations had a stable performance post the major repairs of the Blast Furnace earlier in the year.

The Board yesterday approved the signing of a Memorandum of Understanding with Synergy Metals and Mining fund to divest 70% of stake in Tata Steel Thailand in a 70:30 partnership for the Thailand business.

Company’s equity stands at Rs.1145 crore and EPS was at Rs.5.68 (FV of Rs.10). Reserves is at Rs.67,870 crore.

Popular Comments

No comment posted for this article.