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TATA STEEL 2019-20 Annual Report Analysis
Tue, 31 Mar

TATA STEEL has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

TATA STEEL Income Statement Analysis

  • Operating income during the year fell 11.0% on a year-on-year (YoY) basis.
  • The company's operating profit decreased by 56.3% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 8.7% in FY20 as against 17.6% in FY19.
  • Depreciation charges increased by 14.9% and finance costs decreased by 2.1% YoY, respectively.
  • Other income grew by 28.4% YoY.
  • Net profit for the year declined by 88.9% YoY.
  • Net profit margins during the year declined from 5.3% in FY19 to 0.7% in FY20.

TATA STEEL Income Statement 2019-20

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Net Sales Rs m 1,673,017 1,489,717 -11.0%
Other income Rs m 14,233 18,276 28.4%
Total Revenues Rs m 1,687,250 1,507,993 -10.6%
Gross profit Rs m 294,828 128,924 -56.3%
Depreciation Rs m 75,793 87,077 14.9%
Interest Rs m 77,419 75,807 -2.1%
Profit before tax Rs m 155,849 -15,684 -110.1%
Tax Rs m 67,088 -25,529 -138.1%
Profit after tax Rs m 88,761 9,845 -88.9%
Gross profit margin % 17.6 8.7
Effective tax rate % 43.0 162.8
Net profit margin % 5.3 0.7
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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TATA STEEL Balance Sheet Analysis

  • The company's current liabilities during FY20 stood at Rs 617 billion as compared to Rs 610 billion in FY19, thereby witnessing an increase of 1.0%.
  • Long-term debt stood at Rs 941 billion as compared to Rs 803 billion during FY19, a growth of 17.1%.
  • Current assets fell 0% and stood at Rs 587 billion, while fixed assets rose 10% and stood at Rs 1,904 billion in FY20.
  • Overall, the total assets and liabilities for FY20 stood at Rs 2,491 billion as against Rs 2,328 billion during FY19, thereby witnessing a growth of 7%.

TATA STEEL Balance Sheet as on March 2020

No. of Mths Year Ending 12 Mar-19* 12 Mar-20* % Change
Networth Rs m 689,251 735,763 6.7
 
Current Liabilities Rs m 610,341 616,609 1.0
Long-term Debt Rs m 803,427 941,050 17.1
Total Liabilities Rs m 2,327,734 2,491,491 7.0
 
Current assets Rs m 589,910 587,327 -0.4
Fixed Assets Rs m 1,737,825 1,904,164 9.6
Total Assets Rs m 2,327,734 2,491,491 7.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



TATA STEEL Cash Flow Statement Analysis

  • TATA STEEL's cash flow from operating activities (CFO) during FY20 stood at Rs 202 billion on a YoY basis.
  • Cash flow from investing activities (CFI) during FY20 stood at Rs -145 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during FY20 stood at Rs -17 billion on a YoY basis.
  • Overall, net cash flows for the company during FY20 stood at Rs 45 billion from the Rs -45 billion net cash flows seen during FY19.

TATA STEEL Cash Flow Statement 2019-20

Particulars No. of months 12 12 % Change
Year Ending Mar-19 Mar-20
Cash Flow from Operating Activities Rs m 253,360 201,687 -20.4%
Cash Flow from Investing Activities Rs m -292,109 -145,304 -
Cash Flow from Financing Activities Rs m -6,727 -16,946 -
Net Cash Flow Rs m -45,132 44,620 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Current Valuations for TATA STEEL

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 8.2, an decline from the EPS of Rs 73.8 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 269.8, stands at 18.6 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 0.4 times, while the price to sales ratio stands at 0.2 times.
  • The company's price to cash flow (P/CF) ratio stood at 5.0 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Mar-19* 12 Mar-20*
Sales per share (Unadj.) Rs 1,390.8 1,236.1
TTM Earnings per share Rs 73.8 8.2
Diluted earnings per share Rs 72.6 8.1
Price to Cash Flow x 3.9 5.0
TTM P/E ratio x 7.1 18.6
Price / Book Value ratio x 1.0 0.7
Market Cap Rs m 654,883 488,535
Dividends per share (Unadj.) Rs 13.0 10.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Ratio Analysis for TATA STEEL

  • Solvency Ratios
  • Current Ratio: The company's current ratio deteriorated and stood at 1.0x during FY20, from 1.0x during FY19. The current ratio measures the company's ability to pay short-term and long-term obligations.

    Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 0.8x during FY20, from 3.0x during FY19. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

  • Profitability Ratios
  • Return on Equity (ROE): The ROE for the company declined and down at 1.3% during FY20, from 12.9% during FY20. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

    Return on Capital Employed (ROCE): The ROCE for the company declined and down at 3.6% during FY20, from 15.6% during FY19. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

    Return on Assets (ROA): The ROA of the company declined and down at 3.4% during FY20, from 7.1% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Mar-19* 12 Mar-20*
Current ratio x 1.0 1.0
Debtors’ Days Days 3 2
Interest coverage x 3.0 0.8
Debt to equity ratio x 1.2 1.3
Return on assets % 7.1 3.4
Return on equity % 12.9 1.3
Return on capital employed % 15.6 3.6
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



To see how TATA STEEL has performed over the last 5 years, please visit here.

TATA STEEL Share Price Performance

Over the last one year, TATA STEEL share price has moved down from Rs 520.9 to Rs 269.8, registering a loss of Rs 251.1 or around 48.2%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 5,713.3 (up 5.4%). Over the last one year it has moved down from 11,355.1 to 5,713.3, a loss of 5,642 points (down 49.7%).

Overall, the S&P BSE SENSEX is down 24.2% over the year.

(To know more, check out historical annual results for TATA STEEL and quarterly results for TATA STEEL)

Annual Report FAQs

What is the current share price of TATA STEEL?

TATA STEEL currently trades at Rs 155.9 per share. You can check out the latest share price performance of TATA STEEL here...

What was the revenue of TATA STEEL in FY20? How does it compare to earlier years?

The revenues of TATA STEEL stood at Rs 1,507,993 m in FY20, which was down -10.6% compared to Rs 1,687,250 m reported in FY19.

TATA STEEL's revenue has grown from Rs 981,136 m in FY16 to Rs 1,507,993 m in FY20.

Over the past 5 years, the revenue of TATA STEEL has grown at a CAGR of 11.3%.

What was the net profit of TATA STEEL in FY20? How does it compare to earlier years?

The net profit of TATA STEEL stood at Rs 9,845 m in FY20, which was down -88.9% compared to Rs 88,761 m reported in FY19.

This compares to a net profit of Rs 173,246 m in FY18 and a net loss of Rs -41,762 m in FY17.

Over the past 5 years, TATA STEEL net profit has grown at a CAGR of NaN%.

What does the cash flow statement of TATA STEEL reveal?

The cash flow statement is the financial statement that presents the cash inflows and outflows of a company during a given period of time.

This statement is one of the most useful tools for judging a company's liquidity position. The ratios and parameters in this statement helps test a company's financial health.

The cash flow statement of TATA STEEL reveals:

  • Cash flow from operations decreased in FY20 and stood at Rs 201,687 m as compared to Rs 253,360 m in FY19.
  • Cash flow from investments increased in FY20 and stood at Rs -145,304 m as compared to Rs -292,109 m in FY19.
  • Cash flow from financial activity decreased in FY20 and stood at Rs -16,946 m as compared to Rs -6,727 m in FY19.

Here's the cash flow statement of TATA STEEL for the past 5 years.

(Rs m)FY16FY17FY18FY19FY20
From Operations114,554108,24480,234253,360201,687
From Investments-92,538-90,756-120,256-292,109-145,304
From Financial Activity-47,291-25,79466,399-6,727-16,946
Net Cashflow-20,681-12,44729,330-45,13244,620

What does the Key Ratio analysis of TATA STEEL reveal?

Be it the company's profitability, operations effectiveness or utilization of funds, ratio analysis is an important tool which helps in making investment decisions.

The ratio/financial analysis of TATA STEEL reveals:

  • Operating profit margins witnessed a fall and stood at 8.7% in FY20 as against 17.6% in FY19.
  • Net profit margins declined from 5.3% in FY19 to 0.7% in FY20.
  • Debt to Equity ratio for FY20 stood at 1.3 as compared to 1.2 in FY19.

Here's the ratio/financial analysis of TATA STEEL for the past 5 years.

 FY16FY17FY18FY19FY20
Operating Profit Margin (%)9.58.025.217.68.7
Net Profit Margin (%)-0.4-3.814.25.30.7
Debt to Equity Ratio (x)1.51.71.21.21.3

Read: Latest Annual Report Analysis of TATA STEEL

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