TATA STEEL 2020-21 Annual Report Analysis

Wed, 31 Mar

TATA STEEL has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

TATA STEEL Income Statement Analysis

• Operating income during the year rose 4.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 128.5% YoY during the fiscal. Operating profit margins witnessed a fall and down at 18.8% in FY21 as against 8.7% in FY20.
• Depreciation charges increased by 6.0% and finance costs increased by 0.3% YoY, respectively.
• Other income declined by 51.0% YoY.
• Net profit for the year grew by 698.6% YoY.
• Net profit margins during the year grew from 0.7% in FY20 to 5.0% in FY21.

TATA STEEL Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	1,489,717	1,562,942	4.9%
Other income	Rs m	18,276	8,956	-51.0%
Total Revenues	Rs m	1,507,993	1,571,898	4.2%
Gross profit	Rs m	128,924	294,611	128.5%
Depreciation	Rs m	87,077	92,336	6.0%
Interest	Rs m	75,807	76,067	0.3%
Profit before tax	Rs m	-15,684	135,164	-961.8%
Tax	Rs m	-25,529	56,539	-321.5%
Profit after tax	Rs m	9,845	78,625	698.6%
Gross profit margin	%	8.7	18.8
Effective tax rate	%	162.8	41.8
Net profit margin	%	0.7	5.0

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TATA STEEL Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 709 billion as compared to Rs 617 billion in FY20, thereby witnessing an increase of 14.9%.
• Long-term debt down at Rs 724 billion as compared to Rs 941 billion during FY20, a fall of 23.1%.
• Current assets rose 3% and stood at Rs 602 billion, while fixed assets fell 4% and stood at Rs 1,837 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 2,439 billion as against Rs 2,491 billion during FY20, thereby witnessing a fall of 2%.

TATA STEEL Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	735,763	742,350	0.9
Current Liabilities	Rs m	616,609	708,671	14.9
Long-term Debt	Rs m	941,050	724,088	-23.1
Total Liabilities	Rs m	2,491,491	2,439,092	-2.1
Current assets	Rs m	587,327	602,119	2.5
Fixed Assets	Rs m	1,904,164	1,836,973	-3.5
Total Assets	Rs m	2,491,491	2,439,092	-2.1

TATA STEEL Cash Flow Statement Analysis

• TATA STEEL's cash flow from operating activities (CFO) during FY21 stood at Rs 443 billion, an improvement of 119.8% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -93 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -371 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -22 billion from the Rs 45 billion net cash flows seen during FY20.

TATA STEEL Cash Flow Statement 2020-21

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-20	Mar-21
Cash Flow from Operating Activities	Rs m	201,687	443,267	119.8%
Cash Flow from Investing Activities	Rs m	-145,304	-93,229	-
Cash Flow from Financing Activities	Rs m	-16,946	-370,897	-
Net Cash Flow	Rs m	44,620	-22,003	-

Current Valuations for TATA STEEL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 65.2, an improvement from the EPS of Rs 8.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 812.0, stands at 12.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.3 times, while the price to sales ratio stands at 0.6 times.
• The company's price to cash flow (P/CF) ratio stood at 3.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Sales per share (Unadj.)	Rs	1,236.1	1,296.8
TTM Earnings per share	Rs	8.2	65.2
Diluted earnings per share	Rs	8.1	64.3
Price to Cash Flow	x	3.4	3.8
TTM P/E ratio	x	18.6	12.6
Price / Book Value ratio	x	0.7	0.9
Market Cap	Rs m	488,535	647,533
Dividends per share (Unadj.)	Rs	10.0	25.0

Ratio Analysis for TATA STEEL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.8x during FY21, from 1.0x during FY20. 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 improved and stood at 2.8x during FY21, from 0.8x during FY20. 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 improved and stood at 10.6% during FY21, from 1.3% during FY21. 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 improved and stood at 14.4% during FY21, from 3.6% during FY20. 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 improved and stood at 6.3% during FY21, from 3.4% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Current ratio	x	1.0	0.8
Debtors’ Days	Days	2	2
Interest coverage	x	0.8	2.8
Debt to equity ratio	x	1.3	1.0
Return on assets	%	3.4	6.3
Return on equity	%	1.3	10.6
Return on capital employed	%	3.6	14.4

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 up from Rs 269.8 to Rs 812.0, registering a gain of Rs 542.2 or around 201.0%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 14,350.6 (up 0.4%). Over the last one year it has moved up from 5,713.3 to 14,350.6, a gain of 8,637 points (up 151.2%).

Overall, the S&P BSE SENSEX is up 74.1% over the year.

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

Read: Latest Annual Report Analysis of TATA STEEL