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Tata Steel: Strong Quarterly Performance - Views on News from Equitymaster
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Tata Steel: Strong Quarterly Performance
May 22, 2017

Tata Steel has announced its fourth quarter results of financial year 2016-2017 (4QFY17). The company has reported a 30.6% increase in the topline while the bottomline was in red in 4QFY17.

Performance summary:
  • Total Income from operations increased by 30.6% YoY. This is due to strong volume growth and supportive pricing environment. At a consolidated level, total deliveries increased by 8.1% whereas realisation increased by 20.7% YoY.
  • Indian market performed considerably well with volume growing by 18% YoY and realisation increased by 23.6% YoY. Automotive growth regains post demonetization. PV segment registered highest ever production in the fiscal year with a growth of 9%.
  • Revenue for South East Asia operations grew by 26.2% YoY. This is on the back of improved deliveries at Tata Steel Thailand and supportive realisations.
  • Europe operation performance was satisfactory although steel production was flat on YoY basis.
  • The growth of the European steel-using sectors remained mixed. The construction and machinery sectors continued to drag while the automotive sector fared better due to increased consumer spending.
  • Operating profit increased by whopping 212.8% YoY and operating margin stood at 20.7%. EBITDA from Indian operations increased by 93% YoY. This is due to supportive realisations, strong growth in deliveries and ramp-up of Kalinganagar plant. European operations registered highest EBITDA since 2008. This is on the back of improving sales mix and more favourable market conditions as well as ongoing improvement programmes, including the supply chain transformation programme.
  • Other income increased by 23.4%. Depreciation and finance cost increased by 11.5% YoY and 22.7% YoY respectively.
  • Exceptional items rose to Rs 22.9 billion due to Restructuring and non-cash pension curtailment charges
  • The company registered a net loss of Rs 7.1 billion (before discontinued operation) and net loss of Rs 11.6 Billion after considering the loss from discounted operation.

    Consolidated Financial Performance
    (Rs m) 4QFY16 4QFY17 Change FY16 FY17 Change
    Total Income 259,551 338,960 30.6% 1,019,647 1,122,994 10.1%
    Total Expenses 237,093 268,708 13.3% 939,964 952,916 1.4%
    Operating profit (EBITDA) 22,457 70,252 212.8% 79,683 170,078 113.4%
    Operating profit margin (%) 8.7% 20.7%   7.8% 15.1%  
    Other income 1,233 1,522 23.4% 4,122 5,275 28.0%
    Interest 9,874 12,631 27.9% 42,214 50,722 20.2%
    Depreciation 13,643 15,892 16.5% 53,064 56,729 6.9%
    Profit before tax & exceptional items 174 43,250 24756.6% -11,472 67,902  
    Share of profit /(loss) of JVs & Associates -458 28   -1104 77  
    Exceptional Item -22,958 -40,686   39904 -43242  
    Tax 4,249 9,760 129.7% 6,900 27,780  
    Net profit -27,491 -7,167   20,428 -3,044  
    Loss from Discontinued Operations -2,928 -4,513   -25,399 -38,642  
    Consolidated Net Profit -30,419 -11,680   -4,971 -41,686  
    Net profit margin (%) -11.7% -3.4%   -0.5% -3.7%  
    No. of shares (m)         971  
    Basic diluted earnings per share (Rs) ^         -42.9  
    P/E ratio (x) *         N.A  

    (^annualised, * on trailing twelve month earnings)

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