BLOG
Tata Steel Q1FY23 Review: European operations surprises positively
What's Buzzing:
Tata Steel reported a healthy consolidated performance for Q1FY23 wherein consolidated topline, EBITDA and PAT all came in higher than our estimate. Healthy performance from the Tata Steel's European operations aided the overall beat at the consolidated level.
Context:
For Q1FY23, Tata Steel’s European operations reported a strong beat on the EBITDA front aided by long term contracts and product mix. For the quarter, Tata Steel European operations reported EBITDA/tonne of US$ 365/tonne significantly higher than our estimate of US$ 250/tonne (US$ 89/tonne in Q1FY22 and US$ 241/tonne in Q4FY22). For Q1FY23, Tata Steel standalone operations also reported steady operational performance for Q1FY23. Tata Steel standalone operations reported adjusted EBITDA/tonne of Rs 21326/tonne (down 10% QoQ, 35% YoY), higher than our estimate of Rs 20500/tonne.
Our Perspective:
For Q2FY23E, we expect Tata Steel’s standalone operations EBITDA/tonne to decline from Q1FY23 levels, primarily on account of lower steel prices sequentially. While for Tata Steel’s standalone operations, coking coal consumption cost for Q2FY23E are likely to decline by ~US$ 40/tonne QoQ, sequential fall in steel prices during Q2FY23E is expected to higher than the benefit of moderating coking coal costs. Hence Tata Steel standalone operations EBITDA/tonne for Q2FY23E is expected to be lower than Q1FY23 levels. Similarly, Tata Steel European operations EBITDA/tonne is also likely to decline in Q2FY23E as compared to Q1FY23 levels on the back of recent softness witnessed in global steel prices.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
Related content
Blogs
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Video
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.