TATA STEEL 2022-23 Annual Report Analysis

Wed, 14 Jun

TATA STEEL has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

TATA STEEL Income Statement Analysis

• Operating income during the year fell 0.2% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 48.8% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 13.5% in FY23 as against 26.2% in FY22.
• Depreciation charges increased by 2.6% and finance costs increased by 15.3% YoY, respectively.
• Other income grew by 37.7% YoY.
• Net profit for the year declined by 80.7% YoY.
• Net profit margins during the year declined from 17.1% in FY22 to 3.3% in FY23.

TATA STEEL Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	2,439,592	2,433,527	-0.2%
Other income	Rs m	7,849	10,811	37.7%
Total Revenues	Rs m	2,447,441	2,444,337	-0.1%
Gross profit	Rs m	640,051	327,880	-48.8%
Depreciation	Rs m	91,009	93,352	2.6%
Interest	Rs m	54,622	62,987	15.3%
Profit before tax	Rs m	502,269	182,351	-63.7%
Tax	Rs m	84,776	101,598	19.8%
Profit after tax	Rs m	417,493	80,754	-80.7%
Gross profit margin	%	26.2	13.5
Effective tax rate	%	16.9	55.7
Net profit margin	%	17.1	3.3

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TATA STEEL Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 973 billion as compared to Rs 904 billion in FY22, thereby witnessing an increase of 7.6%.
• Long-term debt stood at Rs 514 billion as compared to Rs 448 billion during FY22, a growth of 14.9%.
• Current assets fell 6% and stood at Rs 866 billion, while fixed assets rose 5% and stood at Rs 1,987 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 2,854 billion as against Rs 2,824 billion during FY22, thereby witnessing a growth of 1%.

TATA STEEL Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	1,144,430	1,030,821	-9.9
Current Liabilities	Rs m	903,969	972,951	7.6
Long-term Debt	Rs m	447,641	514,463	14.9
Total Liabilities	Rs m	2,824,217	2,853,958	1.1
Current assets	Rs m	922,561	866,061	-6.1
Fixed Assets	Rs m	1,898,651	1,987,302	4.7
Total Assets	Rs m	2,824,217	2,853,958	1.1

TATA STEEL Cash Flow Statement Analysis

• TATA STEEL's cash flow from operating activities (CFO) during FY23 stood at Rs 217 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -187 billion, an improvement of 71.7% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -70 billion, an improvement of 70% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs -35 billion from the Rs 101 billion net cash flows seen during FY22.

TATA STEEL Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	443,810	216,831	-51.1%
Cash Flow from Investing Activities	Rs m	-108,812	-186,798	-
Cash Flow from Financing Activities	Rs m	-234,011	-69,807	-
Net Cash Flow	Rs m	100,749	-34,771	-

Current Valuations for TATA STEEL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 6.6, an decline from the EPS of Rs 341.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 113.2, stands at 18.1 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 7.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	1,997.7	199.3
TTM Earnings per share	Rs	341.9	6.6
Diluted earnings per share	Rs	34.2	6.6
Price to Cash Flow	x	3.1	7.8
TTM P/E ratio	x	3.9	18.1
Price / Book Value ratio	x	1.3	1.3
Market Cap	Rs m	1,436,867	1,351,234
Dividends per share (Unadj.)	Rs	5.1	3.6

Ratio Analysis for TATA STEEL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.9x during FY23, from 1.0x during FY22. 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 3.9x during FY23, from 10.2x during FY22. 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 7.8% during FY23, from 36.5% during FY23. 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 15.9% during FY23, from 35.0% during FY22. 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 5.0% during FY23, from 16.7% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	1.0	0.9
Debtors’ Days	Days	2	1
Interest coverage	x	10.2	3.9
Debt to equity ratio	x	0.4	0.5
Return on assets	%	16.7	5.0
Return on equity	%	36.5	7.8
Return on capital employed	%	35.0	15.9

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 99.6 to Rs 113.2, registering a gain of Rs 13.5 or around 13.6%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 20,582.0 (up 1.6%). Over the last one year it has moved up from 16,942.0 to 20,582.0, a gain of 3,640 points (up 21.5%).

Overall, the S&P BSE SENSEX is up 19.3% over the year.

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