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Tata Steel reported disappointing profitability for 2QFY2012. The company’s
profitability suffered on account of higher raw-material costs and subdued
demand at Tata Steel Europe (TSE). Nevertheless, we continue to maintain our
positive stance on Tata Steel and recommend Buy on the stock.
Higher realization leads to top-line growth: Tata Steel’s consolidated net sales
increased by 14.5% yoy to `32,798cr (above our estimate of `30,936cr) mainly
on account of higher average realization. Tata Steel India’s net sales increased by
15.7% yoy to `8,142cr and average realization/tonne increased by 18.6% yoy
to `46,402. However, TSE’s average realization/tonne decreased by 1.0% yoy to
US$1,148 on account of subdued demand in Europe.
EBITDA/tonne declines steeply at TSE: Tata Steel India’s sales volumes decreased
by 0.7% yoy to 1.65mn tonnes and TSE’s sales volumes decreased by 1.7% yoy to
3.48mn tonnes in 2QFY2012. EBITDA/tonne decreased by 19.1% and 47.0% yoy
to US$364 and US$30 in Tata Steel India and TSE operations, respectively, as
increased realization (at India operations) was more than offset by higher
raw-material costs. Consolidated EBITDA decreased by 25.1% yoy to `2,750cr.
Lower other income dents bottom-line performance: Other income fell to `120cr
in 2QFY2012 compared to `814cr in 2QFY2011. Consolidated reported net
profit stood at `212cr in 2QFY2012 compared to `1,979cr in 2QFY2011.
Adjusted net profit decreased by 81.4% yoy to `362cr, significantly below our
estimate of `1,339cr. Standalone net profit during the quarter decreased by
27.6% yoy to `1,495cr.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Steel reported disappointing profitability for 2QFY2012. The company’s
profitability suffered on account of higher raw-material costs and subdued
demand at Tata Steel Europe (TSE). Nevertheless, we continue to maintain our
positive stance on Tata Steel and recommend Buy on the stock.
Higher realization leads to top-line growth: Tata Steel’s consolidated net sales
increased by 14.5% yoy to `32,798cr (above our estimate of `30,936cr) mainly
on account of higher average realization. Tata Steel India’s net sales increased by
15.7% yoy to `8,142cr and average realization/tonne increased by 18.6% yoy
to `46,402. However, TSE’s average realization/tonne decreased by 1.0% yoy to
US$1,148 on account of subdued demand in Europe.
EBITDA/tonne declines steeply at TSE: Tata Steel India’s sales volumes decreased
by 0.7% yoy to 1.65mn tonnes and TSE’s sales volumes decreased by 1.7% yoy to
3.48mn tonnes in 2QFY2012. EBITDA/tonne decreased by 19.1% and 47.0% yoy
to US$364 and US$30 in Tata Steel India and TSE operations, respectively, as
increased realization (at India operations) was more than offset by higher
raw-material costs. Consolidated EBITDA decreased by 25.1% yoy to `2,750cr.
Lower other income dents bottom-line performance: Other income fell to `120cr
in 2QFY2012 compared to `814cr in 2QFY2011. Consolidated reported net
profit stood at `212cr in 2QFY2012 compared to `1,979cr in 2QFY2011.
Adjusted net profit decreased by 81.4% yoy to `362cr, significantly below our
estimate of `1,339cr. Standalone net profit during the quarter decreased by
27.6% yoy to `1,495cr.
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