Tata Steel BSL Ltd's stellar show was led by good volume growth and firm realisations that were ahead of analysts expectations. Sales volumes improved 4% sequentially, while realisations rose a sharp 20%
Tata Steel Ltd's shares gained more than 4% on Thursday following strong performance of its subsidiaries in the fourth quarter. Sequentially, Tata Steel BSL Ltd reported growth in revenue, Ebitda and profit of 24%, 58%, 111%, respectively. Ebitda stands for earnings before interest tax depreciation and amortisation.
The stellar show was led by good volume growth and firm realisations that were ahead of analysts' expectations. Sales volumes improved 4% sequentially, while realisations rose a sharp 20%.
Analysts at Motilal Oswal Financial Services Ltd in their note said realisation at ₹61,367 a tonne was 5% higher than their estimate. This was due to better product mix and higher other operating income (up ₹1,300 a tonne sequentially). During FY21, Tata Steel BSL Ltd repaid a debt of ₹6140 crore. As a result, its net debt stood at ₹10,000 crore at the end of FY21.
Analysts at Jefferies India Pvt Ltd said that Tata Steel BSL's strong performance has a positive read-through for Q4 results of parent.
Meanwhile, another subsidiary -- Tata Steel Long Products Ltd -- also reported stellar performance. Rising steel prices in the country helped the subsidiary report strong improvement in realisation and better-than-expectated volumes. Blended per tonne realization rose 9% sequentially to ₹45,094, as per MOFL’s data. The company’s sponge iron and steel sales too grew 3.6% sequentially. Not surprising, the company’s Ebitda per tonne too improved 17.3% sequentially to ₹14.514. Sequentially, revenue and net profit too grew 13.4% and 11.7%, respectively.
Tata Steel Long Products too is seeing debt reduction led by rising cash flows. During FY21, the company repaid ₹1320 crore, thereby lowering its net debt to ₹1020 crore from ₹2600 crore at the end of FY20, suggests MOFL data.
As the strong performance and debt reduction bode well, the companies are seeing improved earnings outlook The strong demand in the country and rising steel realisations are likely to continue driving their performance.