Tata Steel exceeds Street estimates as Q4 profit climbs 37%; announces stock split

Tata Steel Ltd reported a 37.3% increase in consolidated net profit for the three months ended March 2021, as higher revenue offset an increase in raw material costs.

Profit for the fiscal fourth quarter rose to Rs 9,835 crore from Rs 7,162 crore for the three months ended March 2020.

The company reported a 39% jump in consolidated revenue from operations to Rs 69,323.50 crore last quarter led by strong growth in domestic and European business.

Both revenue and profit exceeded Street estimates. Analysts had expected profit to come in around Rs 9,460 crore and revenue around Rs 66,200 crore.

Cost of materials consumed jumped to Rs 21,421 crore in the fourth quarter from Rs 12,927 crore a year earlier.

The company also announced a stock split in the ratio of 10:1.

Other key highlights

1) Revenue from domestic business comprising Tata Steel India, Tata Steel Long Products, and other Indian operations grew 34% to Rs 36,681 crore.

2) Tata Steel Europe’s revenue grew 53% to Rs 26,389 crore.

3) EBITDA increased 6% to Rs 15,174 crore. EBITDA per tonne rises 3.7% to Rs 18,937.

4) Production in Q4 at 7.62 million tonnes declined 5% from the year-ago period, but deliveries increased 2.3% to 8.01 million tonnes.

5) For 2021-22, consolidated profit surged five times to Rs 41,749 crore and revenue grew by 56% to Rs 2.44 lakh crore.

6) Gross debt stands at Rs 75,561 crore while net debt declined to Rs 51,049 crore.

Management commentary 

Tata Steel managing director and chief executive officer TV Narendran said the Indian business showed broad-based growth. European operations also delivered strong performance as it benefited from a robust business environment.

“Tata Steel has again demonstrated its ability to deliver stellar results despite heightened complexity in the face of COVID as well as geopolitical tensions,” he said.

Koushik Chatterjee, the company’s executive director and Chief Financial Officer, said the company closed the financial year with consistent operating and financial performance as EBIDTA doubled and profit after tax rose more than five times from the previous year.

“This is despite the significant surge in international coal prices and the inflationary impact of various commodities," he said.