Tata Steel Q1 Review - Higher Working Capital Didn’t Allow Deleveraging: ICICI Securities
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ICICI Securities Report
Tata Steel Ltd.'s consolidated Ebitda was below our estimates at Rs 159 billion (our estimate- Rs 169 billion).
The major miss is Europe with an Ebitda of $89/tonne – expectations were firmed up post peer results.
Further, working capital buildup didn’t allow deleveraging in Q1 FY22, net debt was down marginally at ~Rs 740 billion (Rs 753 billion QoQ) - Rs 83 billion being working capital increase.
Standalone operations reported a beat on the back of forex gains and better than expected raw material performance – Ebitda/tonne increased ~ Rs 8000/tonne QoQ to Rs 35,808/tonne.
With steel prices yet to show meaningful correction, Q1 FY22 was a missed deleveraging opportunity.
Tata Steels's management has guided for significantly lower net debt by FY22E end.
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