Tata Steel declared its results for the first quarter of financial year 2018 (1QFY18). The company has reported a 19.2% increase in the topline while the bottomline turned positive in 1QFY18. Here is our analysis of the results.
Performance summary:
- Total Income from operations increased by 19.2% YoY. This is due to strong volume growth and the supportive pricing environment. At a consolidated level, total deliveries increased by 8.6%, whereas realisation increased by 9.9% YoY.
- Indian market performed considerably well with volume growing by 27.9% YoY largely due to the ramp up of Kalinganagar facility. Realisation increased by 9.2% YoY. Automotive growth regained post demonetization. Branded products and Retail sales grew by 19% YoY and now comprise 48% of total sales.
- Revenue for South East Asia operations declined by 1.2% YoY. This is on the back a decline in volumes which fell by 7.7% YoY. Volumes declined due to weak market conditions. Realisation, on the other hand, increased by 7% YoY.
- Europe operation performance was satisfactory, although steel production declined on YoY basis.
- Tata Steel Europe saw a reduction in deliveries during the quarter following higher deliveries in the seasonally strong 4QFY17. Realisation saw an increase of 15.3% YoY reflecting the improved market conditions and increased sales of differentiated products.
- Operating profit increased by 51.9% YoY and operating margin stood at 16.8%. EBITDA from Indian operations increased by 30.7% YoY. This is due to supportive realisations, strong growth in deliveries and ramp-up of Kalinganagar plant. The company saw strong growth in branded products, retail and solutions segment which increased 19% YoY.
- European operations registered a good set of numbers. EBITDA increased by 63% YoY on the back of and currency conditions as well as ongoing improvement programmes.
- Other income increased by 14% YoY. Depreciation and finance cost increased by 21.3% YoY and 25.5% YoY respectively.
- Exceptional items rose to Rs 6.16 billion, mainly due to provision for mining related litigation.
- The company registered a net profit of Rs 9.2 billion after considering the loss from discounted operation.
Consolidated Financial Performance
(Rs m) |
1QFY17 |
1QFY18 |
Change |
Total Income |
247,944 |
295,568 |
19.2% |
Total Expenses |
215,190 |
245,828 |
14.2% |
Operating profit (EBITDA) |
32,754 |
49,740 |
51.9% |
Operating profit margin (%) |
13.2% |
16.8% |
|
Other income |
1364 |
1555 |
14.0% |
Interest |
10707 |
13437 |
25.5% |
Depreciation |
12378 |
15011 |
21.3% |
Profit before tax & exceptional items |
11,033 |
22,846 |
107.1% |
Exceptional Item |
-1,678 |
-6,168 |
|
Tax |
7,403 |
7,405 |
0.0% |
Loss from Discontinued Operations |
-33,925 |
-121 |
|
Share of profit / (loss) of associates |
142 |
59 |
-58.5% |
Net Profit |
-31,831 |
9,211 |
|
Net profit margin (%) |
-12.8% |
3.1% |
|
No. of shares (m) |
|
971 |
|
Basic diluted earnings per share (Rs) ^ |
|
-0.5 |
|
P/E ratio (x) * |
|
N.A |
|
(^annualised, * on trailing twelve month earnings)