A Peek into Tata Steel's Stellar June Quarter Performance

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  
  • Home
  • Views On News
  • Aug 13, 2021 - A Peek into Tata Steel's Stellar June Quarter Performance

A Peek into Tata Steel's Stellar June Quarter Performance

Aug 13, 2021

Lately, metal stocks have been the talk of town as they have benefitted from a global rally in steel prices and rise in demand.

Steel giant Tata Steel continued to reap these benefits in the June quarter as well, as the company on Thursday reported robust earnings.

Tata Steel's net profit soared on the back of a global rally in steel prices and improved performance in the European business.

While many companies have reported a muted performance on sequential basis, Tata Steel's numbers said otherwise, showing that it had a minimal impact of the second wave.

Key financials

Tata Steel beat street estimates as it reported a record consolidated net profit of Rs 97.7 bn during the quarter.

This is a huge improvement versus its highest-ever consolidated net loss of Rs 46.1 bn in the same period last year. The profit was higher than the full-year net profit reported by Tata Steel for fiscal 2021.

Tata Steel's topline more than doubled to Rs 533.7 bn on a year on year (YoY) basis.

--- Advertisement ---
Watch this Before Investing Your Money in EV Stocks

On Monday, we revealed this massive 15x opportunity in electric vehicles.

And also shared the details of 3 EV stocks to ride this mega opportunity.

Now, these are not typical EV stocks. Instead, these are what we call the backdoor EV stocks.

As per our research, the best way to ride the 15x EV wave is through these 3 stocks only.

You can get full details by watching this video...

On the back of rising steel prices, the company reported its highest-ever EBITDA, which increased 25.7 times on a YoY basis to Rs 161.9 bn.

Steel deliveries, which were severely impacted due to the national lockdown around the same time last year, recovered well and were up 33% YoY at 7.1 m tonnes.

However, the impact of the second wave led to a fall of 9% in deliveries on a sequential basis.

Steel production was impacted by the supply of liquid medical oxygen to hospitals, leading to a moderate decline of 1.7%.

Here's a table comparing Tata Steel's results on key parameters.

Financial Snapshot

(Rs bn) Jun-21 Mar-21 Jun-20
Revenue from operations 533.7 499.8 254.8
Raw material cost 200.4 167.6 103.8
EBITDA 161.9 142.9 6.3
Net Profit 97.7 71.6 -46.5
Data Source: Investor Presentation

Commenting on the stellar performance, Tata Steel's MD and CEO, TV Narendran said,

  • Over the last 15 months, the global economy has been recovering driven by policy support and progressive vaccination which has led to improvement in business and customer confidence.

    However, Indian markets were adversely impacted again during the last quarter due to the 2nd wave of Covid-19, which impacted our steel production as well as deliveries.

He added that demand has begun to recover, though domestic steel prices continue to be at a steep discount to China import parity prices.

European business

Tata Steel's sales performance in India operations were flat sequentially but doubled on a YoY basis to Rs 303.4 bn in the June quarter.

The highlight of June quarter was its European business. The European business had an improved quarter, with the impact from rising steel spreads expected to positively benefit in the coming quarters.

--- Advertisement ---
[Alert] Sell These 3 Stocks Immediately

These 3 stocks are ticking time bombs in your portfolio.

It is very likely that you could be owning these 3 overvalued...

fundamentally weak... ready to crash stocks... in your portfolio today.

Because many stock brokers have painted rosy pictures of these stocks. But the reality is starkly different.

If the market crashes, then these stocks could wipe out your wealth.

You should get rid of these stocks as soon as possible.

Click her for full details of these 3 landmines

Decreasing debt and solid capex

Tata Steel's gross debt decreased to Rs 842.4 bn during the quarter. It repaid debt worth Rs 58.9 bn. Net debt fell to Rs 739.7 bn, which improved its net debt to EBITDA ratio.

The company's was able to generate free cash flow worth Rs 35.5 bn despite working capital absorbing Rs 82.7 bn.

Tata Steel spent Rs 20.1 bn on capital expenditure (capex) during the quarter, with the ongoing work on the pellet plant, the cold roll mill complex and the 5 MTPA expansion at Kalinganagar. The Kalinganagar phase-II expansion will drive product mix enrichment and cost reduction.

The company is expecting to bring down its debt significantly by the end of current financial year.

In short, all of Tata Steel's key metrices improved.


In its investor presentation, Tata Steel said that it expects global steel demand to expand by 5.8% in current year 2021.

On steel prices, it said Asian steel prices are expected to remain elevated amid supply tightness with strong demand recovery, stricter production curbs, and high coking coal prices in China.

The same is expected for Indian steel prices.

Equitymaster on the steel sector

Here's what Tanushree Banerjee, Co-head of Research at Equitymaster and editor of Forever Stocks, wrote about the steel sector in one of her editorials.

  • After languishing for years, the reason these stocks are finding so much favour among investors are not difficult to fathom.

    India's revival and the post Covid recovery of corporate India is heavily dependent on new demand.

    The government has tried to stoke such demand with PLI (production linked incentive) schemes.

    To say this has worked would be an understatement.

    MNCs like Apple, Samsung, Dell and Foxconn are all lining up to set up capacities in India.

    All of this has taken the projected demand for steel several notches higher than anticipated.

    So, the demand outlook for steel is looking rosier than ever before. Add to that the chances of higher pricing and sale of premium products.

Meanwhile, ace Technical Analyst at Equitymaster, and editor of the premium monthly recommendation service Fast Profits Report, Brijesh Bhatia is bullish on the steel sector.

Instant Updates: Join Our Telegram Channel and Get Instant Updates

In fact, Brijesh also made a video at the start of this year on the steel sector. As per him, steel is the one sector where he thinks 2021 could see a huge uptick.

His call has been on the mark so far.

In case you haven't seen the video, you can access it below:

How the stock markets reacted to Tata Steel's earnings

Tata Steel share price opened the day down by 0.6% at Rs 1,414 on the BSE, against its previous close of Rs 1,435.

As the session progressed, it reversed losses and rose 1% to Rs 1,457.

Shares again succumbed to profit booking and fell 1% to Rs 1,395.

Ahead of its earnings, Tata Steel shares gained momentum as a rating upgrade by S&P Global Ratings improved sentiment. This is its second rating upgrade in 2021.

Reports suggest that an improving balance sheet is aiding Tata Steel's sentiment as it uses record-low interest rates to trim liabilities.

Tata Steel shares have a 52-week high quote of Rs 1,481 touched last month on 29 July.

They have a 52-week low quote of Rs 343 touched on 24 September 2020.

Up about 246% in the past year and 123% since the start of January 2021, Tata Steel is the top performer of BSE Sensex and NSE Nifty, on course for its biggest annual jump since 2009.

If compared from the lows of Rs 254 touched in March 2020, Tata Steel shares are up a whopping 465%!

At the current price of Rs 1,430, the company commands a marketcap of Rs 1,721.6 bn.

About Tata Steel

Tata Steel commenced operations in 1907, with the establishment of India's first integrated steel plant.

At present, Tata Steel had a global crude steel production capacity of 32.3 MTPA across Jamshedpur, Kalinganagar, South East Asia, Tata Steel BSL and Europe.

The Tata group company has presence across the entire value chain of steel manufacturing from mining and processing iron ore and coal to producing and distributing finished products.

It offers a broad range of steel products including a portfolio of high value-added downstream products such as hot-rolled, cold-rolled, coated steel, rebars, wire rods, tubes and wires.

For more details about the company, check out Tata Steel's fact sheet and Tata Steel's quarterly results on our website.

For a sector overview, you can read our steel sector report.

You can also compare Tata Steel with its peers:

Tata Steel vs JSW Steel

Tata Steel vs SAIL

Tata Steel vs Jindal Steel

Tata Steel vs Hindustan Copper

Tata Steel vs Tata Steel BSL

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Equitymaster requests your view! Post a comment on "A Peek into Tata Steel's Stellar June Quarter Performance". Click here!


More Views on News

Do Metal Stocks Really Track Metal Prices? (Views On News)

Sep 11, 2021

A close look at the performance of base metals and key companies in that sector.

TATA STEEL 2020-21 Annual Report Analysis (Annual Result Update)

Jul 8, 2021 | Updated on Jul 8, 2021

Here's an analysis of the annual report of TATA STEEL for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of TATA STEEL. Also includes updates on the valuation of TATA STEEL.

Tata Steel Gains as June Quarter Output and Sales Jump Over 40% YoY (Views On News)

Jul 5, 2021

Shares of the company have surged 240% in the last year on the back of rising steel prices.

Tata Metaliks Share Price Jumps 8% After Turning Profitable (Views On News)

Jul 14, 2021

A peek into Tata Metaliks' stellar June quarter performance.

Shyam Metalics IPO: Key Points to Consider (Views On News)

Jun 12, 2021

Shyam Metalics is commanding a strong grey market premium ahead of its IPO next week.

More Views on News

Most Popular

Pick the Best Multibagger Stocks in 2022

Every investor is looking for multibaggers stocks. Get free guidance for buying the best multibagger stocks online in india a...

Tata Group Stocks are on Fire: Which one Should You Buy? (Profit Hunter)

Oct 15, 2021

Tata group stocks are on fire. Find out which one deserves your attention.

India's Big PSU Selloff: Watch Out for these Top Stocks (Views On News)

Oct 15, 2021

The government's plan to divest its stakes in PSUs could spark off a rally in these four stocks.

Up 31,500% in a Year! This Packaging Company Sheds its Penny Stock Status (Views On News)

Oct 18, 2021

What's driving the relentless rally in this packaging company?

Insider Alert! Promoters are Increasing their Stakes in these 5 Companies (Views On News)

Oct 19, 2021

Promoters of many small and mid-cap companies are raising their stakes since the last few quarters.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Oct 27, 2021 (Close)


  • Track your investment in TATA STEEL with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks