Tata Steel – The Mercurial

Tata Steel Limited is an Indian multinational steel-making company, based in Jamshedpur, Jharkhand and headquartered in Mumbai. It is a part of the Tata Group.

Formerly known as Tata Iron and Steel Company Limited (TISCO), Tata Steel is one of the top steel producing companies in the world with an annual crude steel capacity of 34 million tonnes. It is one of the world’s most geographically diversified steel producers, with operations and commercial presence across the world. The group (excluding SEA operations) recorded a consolidated turnover of US$19.7 billion in the financial year ending 31 March 2020. It is the second largest steel company in India with an annual capacity of 13 million tonnes after Steel Authority of India Ltd. (SAIL). TATA Steel, along with SAIL and Jindal Steel and Power, are the only 3 Indian steel companies that have captive iron-ore mines, which gives the three companies price advantages.

Tata Steel group is among the top global steel companies with an annual crude steel capacity of 34 million tonnes per annum. It is one of the world’s most geographically diversified steel producers, with operations and commercial presence across the world. The group recorded a consolidated turnover of $ 32.83 billion in the financial year ending March 31, 2022.

Tata Steel operates in 26 countries with key operations in India, Netherlands and the United Kingdom, and employs around 80,500 people. Its largest plant (10 MTPA capacity) is located in Jamshedpur, Jharkhand. In 2007, Tata Steel acquired the UK-based steel maker Corus. It was ranked 486th in the 2014 Fortune Global 500 ranking of the world’s biggest corporations.

Quarterly Growth Walkthrough

Tata Steel has reported a consolidated net profit of ₹1,566 crore during Q4FY23 as compared to a major loss of ₹2,502 crore sequentially. The Q4FY23 net profit is a shocking 84% downfall on a Year-on-Year basis as compared to a net profit of ₹9,835 crore which had been observed in Q4FY22.

Tata Steel’s consolidated revenue from operations was registered at ₹62,962 crore in Q4FY23 which has been enhanced by 10% from ₹57,084 crore sequentially, but it has declined by 9% from ₹69,324 crore Year-on-Year.

Tata Steel EBITDA was computed at ₹7,225 crore in Q4FY23 as compared to ₹4,154 crore in Q3FY23 and ₹15,174 crore in Q4FY22. EBITDA margin was reported at 11% in the last quarter.

The company prioritizes on cost optimisation, operational improvements, and working capital management to maximise cashflows and will focus on engaging their deleveraging journey in FY2024.

Segment wise Performance

Tata Steel’s profitability improved mainly on the performance of the Indian segment.

Tata Steel India’s revenue was registered at ₹34,275 crore which as grown by 12.5% sequentially but it has fallen by 6.5% Year-on-Year. Tata Steel Long Products’ revenue was sturdy with a growth of 43% sequentially and 68% Year-on-Year to ₹3,016 crore. Other Indian operations revenue was reported at ₹6,324 crore in Q4FY23. Indian segment triumphs for the historically highest annual crude steel production of 19.88 million tons and the historically highest deliveries of 18.87 million tons considering the full fiscal year.

Tata Steel Europe revenue was reported at ₹22,036 crore in Q4FY23, registering a growth of 6.22% sequentially and declining by 16.5% year-on-year basis. Europe revenues were £9,293 million and EBITDA was £477 million.

Declaration of Dividend

Tata Steel’s board members have recommended a dividend of ₹3.60 per equity share having a face value of Re 1 each which is about 360% for FY23.

The dividend is subject to shareholders’ approval which will be achieved in the Annual General Meeting (AGM) of the company which has been scheduled on 5 July 2023. If the proposal is approved, Tata Steel plans to pay the dividend benefits from 10 July 2023.

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