Tata Steel dips into net loss of Rs 2,224 crore in Q3FY23

It was a disappointing Q3FY23 for Tata Steel reporting a net loss of Rs 2,224 crore, compared to net profit of Rs 9,573 crore in the year ago period. Even top line came under pressure in the quarter as Tata Steel revenues fell 6.08% to Rs 57,084 crore for the December 2022 quarter. While lower profits were on the cards, even the street did not expect such a huge net loss and to that extent, it underperformed expectations.

For December 2022 quarter, Tata Steel reported earnings before interest, taxes, depreciation and amortization (EBITDA) of Rs 4,154 crore. The EBITDA margin for Q3FY23 at 7%, came under pressure, with a sharp drop in realizations in the European business of Tata Steel. However, in India, the performance was strong despite low steel prices, as the fall in input costs compensated for this spike.

For the December 2022 quarter, India deliveries were 4.74 MT. The 7% growth in deliveries was largely driven by 11% domestic deliveries. This includes the integration of Neelachal Ispat acquired from NCLT resolution. As of December 2022, net debt (net of cash equivalents) of Tata Steel stood at Rs 71,706 crore. That is net debt/EBITDA ratio of 1.76x and Net Debt/Equity ratio of 0.65x.

The losses stemmed from deferred tax provisions for actuarial movements. The British Steel Pension Scheme (BSPS) with Tata Steel UK as sponsor has nearly 60% of its liabilities insured. The total non-cash deferred tax expense for the quarter stood at Rs1,783 crore. Capex of Tata Steel is along planned lines. In Q3FY23, Tata Steel capex spending was Rs3,632 crore, including the Kalinganagar, phased commissioning of 6 MTPA pellet plant.