The shares of Tata Steel plunged over 4% in the early trading session on Thursday, after the company reported a 64% dip in net profit year-on-year in Q4FY24 on Wednesday. The share price of Tata Steel slipped 4.27%, reaching an intra-day low of Rs 166.80 on the NSE.
On Wednesday, Tata Steel reported a 64% decline in consolidated net profit to Rs 611 crore for the quarter ended March 2024, compared to Rs 1,705 crore in the same quarter the previous year. This profit figure fell short of D-Street’s Rs 991-crore estimates.
Revenue from operations for the reporting quarter also dropped by 7% year-on-year to Rs 58,687 crore.
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The company’s board has approved a proposal to infuse up to $2.11 billion (Rs 17,407.50 crore) by subscribing to equity shares of T Steel Holdings Pte Ltd, its wholly-owned foreign subsidiary, in one or more tranches during FY25.
During the January-March 2024 period, the company recorded an EBITDA of Rs 6,631 crore, with an EBITDA margin of 11%.
Tata Steel spent Rs 4,850 crore on capital expenditure during the quarter and Rs 18,207 crore for the full year. The phased commissioning of the 5 MTPA expansion at Kalinganagar is progressing as planned.
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In the fourth quarter, India deliveries increased by 5% year-on-year to 5.42 million tonnes. Revenues from the domestic business amounted to Rs 36,864 crore, with an EBITDA of Rs 8,261 crore and an EBITDA margin of around 22%.
For the quarter, UK revenues were £647 million with an EBITDA loss of £34 million. The Netherlands business reported revenues of £1,324 million and an EBITDA loss of £27 million.
Brokerages on Tata Steel
Jefferies on Tata Steel
Jefferies has maintained its Buy call on Tata Steel, setting a target price of Rs 200. According to the report, Tata Steel’s Q4 EBITDA rose 5% quarter-on-quarter (QoQ), though it was down 9% year-on-year (YoY) and 7% above estimates.
The standalone EBITDA per tonne fell 12% QoQ, affected by lower average selling prices (ASP). However, the EBITDA per tonne loss narrowed significantly from $191 in Q3 to $40 in Q4. The Q4 net debt remained flat QoQ.
Additionally, the company plans to infuse $2.1 billion into its overseas holding company to repay existing debt at offshore entities and to support restructuring costs in the UK.
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Morgan Stanley on Tata Steel
Morgan Stanley has issued an Equal-Weight call on Tata Steel, with a target price of Rs 135. The report notes that Tata Steel’s consolidated EBITDA exceeded expectations, primarily due to stronger-than-anticipated performance in both its domestic and overseas operations.
In the domestic sector, the Tata Steel Kalinganagar Phase 2 expansion is progressing well and remains on track. This expansion is expected to enhance the company’s production capacity and operational efficiency.
For the UK operations, Morgan Stanley points out that Tata Steel’s existing heavy assets are approaching their closure. This development could signal a shift in the company’s strategic focus in the region, potentially leading to a reallocation of resources or investments.
(Disclaimer: Views, recommendations, opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)
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