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Systematix Research Report
Tata Steel Ltd.’s Q2 FY22 consolidated Ebitda of Rs 164.5 billion (up 169.3% YoY, up 2.1% QoQ) was 26% below our estimates.
Performance of its three key divisions:
standalone operations Ebitda was Rs 105 billion,
BSL Ebitda (reported earlier) was Rs 31 billion and
Tata Steel Europe Ebitda was Rs 33 billion.
Earnings were largely driven by a sharp 80% YoY and 12% QoQ surge in realisations. Ebitda margin at $479/tonne (up 145% YoY, down 8% QoQ) was 20% below our estimates, impacted by a combination of lower net sales realisation, volume and higher costs.
Near-term costs are expected to rise on account of higher coking coal prices, partially offset by estimated higher volumes.
Tata Steel reduced its debt by Rs 114 billion during H1 FY22 and is likely to continue deleveraging aggressively given high free cash flow generation despite dividend and capex outlay.
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