Tata Steel Q3 net profit jumps 139% to Rs 9598 cr, generates strong free cash flow

Jamshedpur, Feb 4: Tata Steel, today, announced its financial results for the third quarter of FY22. The Company’s consolidated Profit after Tax grew 139% YoY to Rs 9,598 crores, compared to Rs 4,011 cr reported in the same quarter of the last financial year. The consolidated Revenues stood at Rs 60,783 crores compared to Rs 41,935 crores in the previous fiscal, thus registering an increase of 45% YoY.

Tata Steel reported strong consolidated free cash flow of Rs 6,338 crores during the quarter and repaid debts of Rs 17,376 crores in the first nine months of the current financial year.

Tata Steel has spent Rs 2,790 crores on capex during the quarter. The 5 MnTPA expansion at Kalinganagar Works, including the Pellet plant and the Cold Roll Mill complex, is ongoing.

Tata Steel Long Products, a subsidiary of Tata Steel, has been announced as the winner of the bidding process to acquire 93.71% stake in the 1 million ton per annum Neelachal Ispat Nigam Limited. The Company has also completed the merger of Tata Steel BSL with Tata Steel.

T V Narendran, Chief Executive Officer & Managing Director, Tata Steel, said: “India steel demand has begun to improve on the back of continued economic recovery as 3rd wave of COVID begins to ebb. Our steel deliveries in India expanded by 4% in the first nine months of the financial year along with an improvement in product mix. We continue to drive value accretive growth in our chosen segments and our performance in key segments such as auto was robust despite the sector being impacted by the semiconductor shortage. Our European operations continue to perform underpinned by strong improvement in realizations.

We continue to progress on our stated goals. We became the first company in the world to conduct trials to inject Coal Bed Methane gas into a Blast Furnace in a bid to reduce emissions. Our 5 MTPA TSK phase II expansion including the pellet plant and CRM complex is progressing well. Tata Steel Long Products has been declared the winning bidder for Neelachal Ispat Nigam Limited. This will enable us to significantly ramp up our Long products portfolio and benefit from the growth in infrastructure in India and retail housing growth in semi urban India. We will leverage our retail brands and pan India distribution network to drive scale, profitability and cashflows.”

Crude steel production in India increased by 2% QoQ and 4% YoY to 4.81 mn tons. Domestic deliveries increased by 2% QoQ. India Sales volume to Automotive segment remained steady QoQ despite 9% drop in Auto OEM production due to semiconductor shortages.

Koushik Chatterjee, Executive Director and Chief Financial Officer, Tata Steel, said: “Tata Steel continued to deliver strong operating and financial performance in 3QFY22 with year on year EBIDTA growth of 64% and Profit after Tax growth of 139%. The company posted strong operating cash flows in the quarter despite a significant surge in international coal prices and increased working capital requirements. Despite market volatility, the revenues were broadly stable at Rs 60,783 crores while EBIDTA was Rs 15,853 crores which works out to a margin of 26% with Tata Steel Standalone EBIDTA margin at 38%. Our cash outflow on consolidated capex for the quarter was Rs 2,790 crores taking the nine months capex to Rs 6,416 crores which is well within the earlier guidance. Tata Steel generated strong free cash flows of Rs 6,338 crores for the quarter which were used to reduce the debt. Tata Steel Long Products has been declared the winning bidder for acquisition of Neelachal Ispat Nigam Limited and we are progressing on the formalities. The acquisition will be financed by Tata Steel largely through a combination of internal accruals and bridge funding.

Tata Steel continues to remain focused on its enterprise strategy to deleverage its Balance Sheet while it pursues its growth priorities. During the first nine months we have repaid Rs 17,376 crores of debt and our net debt as at end December stands at Rs 62,869 crores. As a result of the strong financial performance, our Net Debt / EBIDTA has come down further to <1x and the financial metrics of the company continue to be at investment grade level.”

In yet another step towards reducing carbon emissions, Tata Steel is conducting trials to inject Coal Bed Methane gas into a blast furnace to reduce coke consumption during steelmaking. The trial will also provide useful insights regarding operation of blast furnaces with hydrogen-based injectants.