Tata Steel shares fall 5% on surprise loss in Dec quarter

Shares of Tata Steel, the country’s largest steel producer, dropped nearly 5% in the opening trade on Tuesday after the company reported weak earnings for December quarter of the current fiscal, dented by a sharp drop in realisations and spreads in Europe. The company’s Europe business was impacted due to slowdown in demand amid recession concerns, which weighed on steel prices, while elevated energy costs also affected its performance.

Weighed down by weak Q3, shares of Tata Steel opened 4.8% lower at ₹112 against the previous closing price of ₹117.6 on the BSE. At the time of reporting, the share of steel heavyweight was trading at ₹113.85, down 3.2%, while the market capitalisation stood at ₹1.39 lakh crore. In comparison, the BSE Sensex was up 115 points, or 0.19%, at 60,621 levels.

Tata Steel shares currently trades 19% lower than its 52-week high of ₹139.6 touched on April 6, 2022, while it hit a 52-week low of ₹82.71 on June 23, 2022. The steel heavyweight has delivered a negative return of 3.7% in the last one year, while it rose 6.2% in the past six months. In the last one month, the stock has shed over 3%, while it dropped nearly 6% in a week.

The Tata group company posted a surprise consolidated net loss of ₹2,223.84 crore for the third quarter ended December 2022, against a profit of ₹9,572.67 crore in the same quarter last year. The revenue from operations fell 6.08% to ₹57,083.56 crore from ₹60,783.11 crore in the corresponding period last year. EBITDA fell sharply to ₹4,154 crore from ₹15,853 crore in the year ago period, while the EBITDA margin stood at around 7%.

As per the exchange filing, the company spent ₹3,632 crores on capital expenditure during the quarter. The net debt stood at ₹71,706 crore as of December 31, 2022.

India deliveries stood at 4.74 million tonnes and were up 7% YoY primarily driven by 11% growth in domestic deliveries, which has also enabled an improvement in product mix.

T.V. Narendran, Chief Executive Officer & Managing Director, said, “Tata Steel has delivered steady growth in India volumes despite the volatile operating environment. Domestic deliveries stood at around 13.7 million tons in the first nine months of the financial year and were up 4% YoY. Broad-based growth was witnessed across most segments. For the quarter, domestic deliveries were up 11% YoY and grew at a faster pace than India apparent steel consumption aiding in retaining market leadership position across chosen segments.”

“Our crude steel production touched 5 million tons in 3QFY23 for the first time in India, with Neelachal Ispat Nigam limited commencing operations. We are presently expanding our capacities across multiple sites at Tata Steel Kalinganagar, Neelachal Ispat Nigam Limited and the Electric Arc Furnace at Ludhiana in Punjab and at our downstream plants across India. Moving to Europe, our deliveries were lower in 9MFY23 due to slowdown in demand. Recession concerns weighed on steel prices, which coupled with elevated energy costs affected our performance.”

Going ahead, the company expects pick up in steel prices across key regions on improved China demand outlook and sustained spending on infrastructure in India. It also aims to achieve net zero carbon by 2045.