Tata Steel Q4FY23 PAT falls sharply to Rs1,705 crore on higher input costs and lower realizations

Tata Steel reported -9.2% lower net revenues for the March 2023 quarter at Rs62,962 crore. The revenues were up 10.3% on a sequential basis. During the year, the total steel output of Tata Steel India touched 19.9 million tonnes and the company is all set to scale 40 MTPA in the next few years. The expansion in Kalinganagar will be a key part of this strategy. In FY23, the domestic steel sales of Tata Steel were up 11% yoy. In terms of end use sectors, construction and infrastructure remains the biggest consumer of steel, followed by auto ancillaries. Housing and engineering goods are the other major contributors.

Due to the sharp spike in the input costs like iron ore and coking coal, the fiscal year FY23 saw a sharp fall in the EBITDA margins from 26.2% to 13.4%. In the last one year, the net debt to EBITDA has gone up from 0.80X to 2.07X. As of the close of March 2023, Tata Steel has gross debt of Rs84,893 crore and net debt of Rs67,810 crore. The EBITDA per tonne at Rs11,358 is higher compared to FY21 but almost half that of FY22.

Financial highlights for Mar-23 compared yoy and sequentially

 Tata Steel 

Rs in Crore

Mar-23

Mar-22

YOY

Dec-22

QOQ

Total Income (Rs cr)

₹ 62,962

₹ 69,324

-9.18%

₹ 57,084

10.30%

Operating Profit (Rs cr)

₹ 7,225

₹ 15,174

-52.38%

₹ 4,154

73.95%

Net Profit (Rs cr)

₹ 1,705

₹ 9,756

-82.53%

₹ -2,224

N.A.

 

 

 

 

 

 

Diluted EPS (Rs)

₹ 1.40

₹ 7.99

 

₹ -1.82

 

OPM

11.48%

21.89%

 

7.28%

 

Net Margins

2.71%

14.07%

 

-3.90%

 

 

While realizations were higher in India, Tata Steel saw a drop in realizations in Europe. In the March quarter, Tata Steel spent Rs4,396 crore on capex while it spent Rs14,142 crore for the full year. For FY23, the Indian steel business generated an EBITDA margin of 20% while the European steel business generated a margin of just 5%. The sharp fall in the net margins is a sign of cost pressures and lower realizations in a tough quarter.

The company has recommended a dividend of Rs3.60 per share.

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