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Tata Steel Q2 Results: Profit Jumps But Higher Costs Drag Operating Income

Tata Steel’s consolidated net profit rose 33.8% over the preceding quarter to Rs 11918.1 crore in July-September.

An employee passes rolls of steel in storage. (Photographer: Krisztian Bocsi/Bloomberg) 
An employee passes rolls of steel in storage. (Photographer: Krisztian Bocsi/Bloomberg) 

Tata Steel Ltd.’s second-quarter profit jumped beating estimates but higher costs weighed on its operating income.

The steelmaker’s consolidated net profit rose 33.8% over the preceding quarter to Rs 11918.1 crore in July-September, according to an exchange filing. That compares with the Rs 11,199. 2-crore consensus estimate of analysts tracked by Bloomberg.

Tata Steel reported an exceptional gain of Rs 516 crore from the sale of NatSteel operations.

Other Highlights (QoQ)

  • Revenue rose 12.9% to Rs 60,282.8 crore, driven by higher prices of hot-rolled coil steel and increased domestic sales. Analysts had estimated Rs 59,034.7 crore.

  • Operating profit rose 2.1% to Rs 16,456.1 crore, compared with the estimated Rs 19,025.4 crore.

The rise in Ebitda was offset by an increase in purchased iron ore and coal consumption costs across key entities, including finished and semi-finished goods.

Higher other expenses on account of higher royalty, rates and taxes at Tata Steel Europe, increase in energy cost and adverse forex impact at overseas entities, too, ate into the operating income.

Tata Steel's India deliveries increased 11% sequentially even as demand remained muted amid seasonal weakness. Deliveries were 9% lower year-on-year due to higher opening stock.

Other Highlights (QoQ)

  • Tata Steel’s reported standalone Ebitda stood at Rs 13,557 crore, up 1.4%.

  • Tata Steel’s reported European operations Ebitda stood at Rs 3,340 crore, up 117.9%.

  • Tata Steel’s long products’ division reported Ebitda stood at Rs 302 crore, down 45.5%.

  • Company generated free cash flows of Rs 3,322 crore.

The company also repaid debt of Rs 11,424 crore in H1 FY22.

Shares of Tata Steel closed flat before the results were announced compared with a 0.7% fall in the BSE Sensex.