TATA STEEL 2020-21 Annual Report Analysis

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TATA STEEL 2020-21 Annual Report Analysis
Thu, 8 Jul

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
* 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 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
* 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 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 -
* 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 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 1,199.4, stands at 18.4 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 0.9 times, while the price to sales ratio stands at 0.4 times.
  • The company's price to cash flow (P/CF) ratio stood at 8.4 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 8.2 65.3
Price to Cash Flow x 14.9 8.4
TTM P/E ratio x 18.4 18.4
Price / Book Value ratio x 0.7 0.9
Market Cap Rs m 1,445,478 1,444,161
Dividends per share (Unadj.) Rs 10.0 25.0
* 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 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 19 22
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
* 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 up from Rs 334.2 to Rs 1,199.4, registering a gain of Rs 865.2 or around 258.9%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 18,694.0 (down 1.8%). Over the last one year it has moved up from 7,434.3 to 18,694.0, a gain of 11,260 points (up 151.5%).

Overall, the S&P BSE SENSEX is up 44.5% over the year.

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

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TATA STEEL Announces Quarterly Results (2QFY21); Net Profit Down 61.2% (Quarterly Result Update)

Nov 26, 2020 | Updated on Nov 26, 2020

For the quarter ended September 2020, TATA STEEL has posted a net profit of Rs 16 bn (down 61.2% YoY). Sales on the other hand came in at Rs 372 bn (up 7.4% YoY). Read on for a complete analysis of TATA STEEL's quarterly results.

TATA STEEL 2019-20 Annual Report Analysis (Annual Result Update)

Aug 7, 2020 | Updated on Aug 7, 2020

Here's an analysis of the annual report of TATA STEEL for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of TATA STEEL. Also includes updates on the valuation of TATA STEEL.

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