Tata Steel shares up 2% post 55% rise in Q1 profit

Shares of steel major Tata Steel Ltd are trading up today after the company reported about 55% rise in its profit in the quarter ending June 30, 2024.

The Tata Steel share opened a gap up at ₹168 and soon hit the day's high at ₹168.90, lower 8.5% than its one-year high of ₹184.60 touched on June 18, 2024. At the current share price of ₹166.65, the company's m-cap stands at ₹2,08,036 lakh crore. In share performance, Tata Steel has seen a 34.98% jump in the past year and surged 18.91% in the year-to-date period. In the past six months, the scrip rose 23.33%.

Tata Steel reported a net profit of ₹960 crore in the April-June quarter of FY25, up 55% YoY from ₹634 crore in the year-ago period, mainly driven by a recovery in the Netherlands. The profit for the said quarter was lower than ₹994-₹1,025 crore expected by various brokerage analysts.

Tata Steel’s consolidated revenues for the April–June 2024 quarter was ₹54,771 crore, down 7%, and EBITDA was ₹6,822 crore, with an EBITDA margin of around 12.5%. Its India revenue was ₹33,194 crore for the quarter and EBITDA was ₹7,029 crore, which translates into an EBITDA margin of 21%.

The company says it spent ₹3,777 crore on capital expenditure during the quarter. “The phased commissioning of the 5 MTPA expansion at Kalinganagar is progressing well towards blast furnace start-up in September 2024.”

Tata Steel’s net debt stands at ₹82,162 crore. “Our group liquidity remains strong at ₹36,460 crore, which includes cash & cash equivalents of ₹10,799 crore.”

T.V. Narendran, CEO and MD, Tata Steel says the group’s liquidity remains strong at ₹36,460 crore, which includes ₹10,799 crore of cash and cash equivalents. "We also remain focussed on cost optimisation, operational improvements and working capital management to maximise cashflows."

The Tata Group-owned steelmaker has also acquired more than 557 crore equity shares in its Singapore subsidiary for $875 million (₹7,324.41 crore). T Steel Holdings Pte. Ltd (TSHP) is a wholly owned foreign subsidiary of the company.

The development came after in May, the board of Tata Steel gave the green light for injecting funds into T Steel Holdings via the subscription of equity shares in multiple phases.

Brokerage Centrum, in its July report on steel companies in India, had said it expected steel companies to witness lower sales volume by 3-12% QoQ, however increase in steel prices (₹400-2000/t) as well as lower coking coal price (USD10-35/t) could partially support earnings. “We expect, steel companies to report a decline in revenue/EBITDA/PAT by 7%/7.6%/18% QoQ.”