BackTata Steel earns consolidated PAT of ₹1,566 cr in Q4, beats estimates; recommends 360% dividend
Tata Steel posted a strong PAT of ₹1,566 crore on a consolidated basis in Q4FY23, against a huge losses that was recorded in Q3 of the same fiscal. The board has recommended 360% dividend for shareholders.
PremiumTata Group's steel flagship company, Tata Steel surpassed the street's expectations in the fourth quarter of FY23 by posting a consolidated net profit of ₹1,566.24 crore against a huge loss of ₹2,501.95 crore in Q3 of the same fiscal. The company's board recommended a dividend of 360% on Tuesday for its shareholders and has announced the record date for the same.
Noteworthily, the latest quarterly PAT is an 83.95% drop compared to a profit of ₹9,756.2 crore witnessed in Q4 of FY22.
Along similar lines, Tata Steel's consolidated revenue from operations stood at ₹62,961.54 crore in Q4FY23, rising by 10.3% from ₹57,083.56 crore in Q3FY23, but lower by 9.2% from ₹69,323.5 crore in the same quarter a year ago.
Tata Steel's profitability improved primarily on India's performance.
The steel giant reported an EBITDA of ₹7,225 crore in Q4FY23 versus ₹4,154 crore in Q3FY23 and ₹15,174 crore in Q4FY22. EBITDA margin stood at 11% in the quarter under review.
On segment-wise revenue breakup, Tata Steel India's revenue stood at ₹34,275.25 crore up by 12.50% QoQ but lower by 6.55% YoY. On the other hand, Tata Steel Long Products' revenue stood strong with a growth rate of 42.73% QoQ and 67.60% YoY to ₹3,015.81 crore. Other Indian operations revenue also picked up to ₹6,323.83 crore in Q4FY23.
Meanwhile, the revenue of Tata Steel Europe stood at ₹22,036.15 crore in Q4FY23, registering a growth of 6.22% sequentially but declining by 16.5% year-on-year basis.
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Tata Steel highlighted that Europe revenues were £9,293 million and EBITDA was £477 million, translating to an EBITDA per ton of £58. The product mix has been affected due to the ongoing upgradation of the Cold Mill in Ijmuiden (CM21). The relining of one of the blast furnaces at Ijmuiden commenced in early April.
Furthermore, in Q4FY23, the company's production stood at 7.80 million tons versus 7.56 million tons in Q3 of the same fiscal, and 7.62 million tons of the same quarter previous fiscal. Deliveries stood at 7.78 million tons, improving from 7.15 million tons in December 2022 quarter but lower from 8.01 million tons in Q4 of FY22.
Notably, India's business achieved the highest-ever annual crude steel production of 19.88 million tons and the highest-ever deliveries of 18.87 million tons in the overall fiscal.
For full-year FY23, consolidated revenues stood at ₹2,43,353 crore and were broadly similar on YoY basis despite the volatile operating environment across geographies. While consolidated EBITDA stood at ₹32,698 crore, with an EBITDA margin of ~13%. Consolidated Profit after Tax stood at ₹8,075 crore.
T V Narendran, Chief Executive Officer & Managing Director said, "FY2023 saw our India crude steel production growing to around 19.9 million tons, with a 65% share of our overall volumes. Deliveries were in line with production with domestic deliveries growing 11% YoY and driving product mix improvement. The quarter also saw strong momentum with deliveries growing by 9% QoQ to 5.15 million tons."
While Koushik Chatterjee, Executive Director and Chief Financial Officer highlighted that Tata Steel's India business generated a margin of 20% while Europe was at 5% with higher input costs affecting margins. The consolidated ROIC was 15% for the full year.
Chatterjee added that the company's financial metrices continue to be within its medium-term targets, with Net debt to EBITDA at 2.07x and Net debt to equity at 0.61x.
He said, the company remains focused on cost optimisation, operational improvements, and working capital management to maximise cashflows and will aim to resume our deleveraging journey in FY2024.
Additionally, Narendran said, "Sustainability is at the core of our strategy and Tata Steel has committed to Net Zero by 2045. Our route and pace of decarbonisation across geographies will be calibrated for each location based on the local regulatory framework, government support, and willingness of customers to pay for higher-cost green steel."
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In a meeting held on Tuesday, Tata Steel's board members recommended a dividend of ₹3.60 per equity share having a face value of Re 1 each. In percentage terms, the dividend comes to around 360% for FY23.
The dividend is subject to shareholders' approval which will be sought in the Annual General Meeting (AGM) of the company scheduled on July 5, 2023. If approved, Tata Steel plans to pay the dividend benefits on and from July 10, 2023.
On BSE, Tata Steel's share price closed at ₹110.30 apiece up by 2.22%.
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