Tata Steel rallies 5%, hits 52-week high on strong September quarter result

Shares of Tata Steel hit a 52-week high of Rs 515, up 5 per cent in the early morning trade on Tuesday, thus gaining 6 per cent in the past two trading days after the company reported a strong set of numbers on operational front for the quarter ended September 2020(Q2FY21). The stock of the Tata Group company surpassed its previous high of Rs 505.95, touched on January 14, 2020.

Tata Steel delivered strong results in India with broad-based, market-leading volume growth, and strong cash flow generation in Q2FY21. The company’s Ebitda (earnings before interest, taxes, depreciation, and amortisation) from India operations surged 4.1 times quarter-on-quarter (QoQ) and 49 per cent year-on-year (YoY) to Rs 6,025 crore, driven by higher volumes, improved realisations, and cost efficiencies.

In Q2FY21, the company’s consolidated Ebitda surged 10.4 times QoQ and 60 per cent YoY to Rs 6,217 crore while consolidated profit after tax from continuing operations increased by 136 per cent QoQ to Rs 1,635 crore.

The free cash flow generated during the quarter was Rs 7,832 crore. The company said it is committed to deleveraging of $1billion annually and has reduced net debt by Rs 8,197 crore during the quarter.

However, on a year-on-year (YoY) basis, consolidated net profit was down 50 per cent as tax expenses ate into the profits even as sales were up. Net sales of the company stood at Rs 36,476 crore in the period under review, up 7.4 per cent from the same period last year due to higher volumes, improved realisations, and cost efficiencies. The tax expense of Rs 613 crore in the September quarter hurt the company’s bottomline in the period under review.

At the group level, based on interest received, the company has initiated talks with SSAB Sweden for the potential sale of Tata Steel’s Netherlands business. This process will now move to the next stage including due diligence and stakeholders' consultations.