Tata Steel reported a 21.6% YoY fall in consolidated net profits to INR 77.6bn ($973mn) for the quarter ended June. The profit decline is attributed to higher raw materials costs and tax expenses. This is despite an 18.6% YoY increase in revenues to INR 634.3bn ($7.9bn); revenue on a per ton basis also rose by 11.3% to INR 83.6k ($1,000). On the balance sheet front, net debt rose by 6.7% QoQ to INR 545bn ($6.8bn). It is worth noting that in the quarter, the company incurred capex of INR 27.3bn ($340mn) on the Kalinganagar expansion of the 6 MTPA Pellet plant and also completed the acquisition of Neelachal Ispat Nigam Ltd (NINL) for $1.5bn.
Mr. Koushik Chatterjee, Executive Director, and CFO said, “[The] Company expects volatility in terms of steel price and input cost movement to continue in the next quarter but expect the spreads to stabilise in the second half of the year. The volatility in commodity prices and the immediate impact of the export duty in India has led to an increase in working capital but cost improvement and other initiatives along with an expected pickup in demand in the second half of the year should result in normalization of working capital. Company is committed to annual deleveraging target of $1bn.” During the quarter, Tata Steel was also upgraded to BB+ from BB by Fitch.

Tata Steel’s USD 5.45% 2028s were up over 0.1 points to 97.2, yielding 6%.

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