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India: Tata Steel sees rise in production, sales in Q2FY24, benefits from lower coking coal costs

Tata Steel’s production and sales volumes increased q-o-q in Q2FY24 owing to strong domestic demand. The company’s capex was INR 4,553 crores during the quart...

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BigMint Bureau

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2 Nov 2023, 18:41 IST

India: Tata Steel sees rise in production, sales in Q2FY24, benefits from lower coking coal costs

Tata Steel's production and sales volumes increased q-o-q in Q2FY24 owing to strong domestic demand. The company's capex was INR 4,553 crores during the quarter and INR 8,642 crores for the half year and capex guidance is INR 16,000 crores for FY2024.

Project updates

The 5 million tonnes per annum (mtpa) expansion at Kalinganagar is underway with facilities getting commissioned in a phased manner.
The capacity expansion of downstream (tubes, wires, tinplate and DI pipes) from 2 mtpa to 7 mtpa is underway.
Work has commenced on enabling activities with respect to the 0.75 mtpa electric arc furnace in Ludhiana. It is expected to be commissioned by FY26.

Other highlights:

Production up q-o-q: Tata Steel's standalone crude steel production rose 1% q-o-q to 4.91 mnt in Q2FY24 as compared with 4.84 mnt in the last quarter. On y-o-y basis too, the same registered an increase of 2% against 4.8 mnt in Q2FY23.

Sales inched up q-o-q: The company's sales inched up by 1% q-o-q to 4.82 mnt in Q2FY24 from 4.79 mnt in Q1FY24. However, on an annualised basis, the same registered a fall of 2% as against 4.91 mnt in CPLY.

Exports fell by 20% q-o-q to 0.20mnt in Q2FY24 from 0.25 mnt in Q1FY24. At y-o-y basis the exports plunged 63% from 0.54 mnt in Q2FY23.

In domestic sales for current quarter, the share of the automotive sector grew by 13% q-o-q to 0.72 mnt in Q2FY24, branded products and retail sector grew by 3% to 1.62 mnt. However, share of industrial products and projects fell by 1% to 1.87 mmt.

EBITDA up 4% q-o-q: The company's standalone earnings before interest, tax, depreciation, and amortisation (EBITDA) registered a decline of 8% q-o-q to INR 6,917 crore in Q2 as compared to INR 7,503 crore in the preceding quarter. However, EBITDA grew by 40% y-o-y from INR 4954 crores in Q2FY23.

Net sales realisations (NSR): The company's realisations declined by INR 2,400/t in Q2 as against the guidance of INR 3,000/t. Furthermore, the company expects realisations to improve by INR 2,200/t in Q3.

Lower raw material prices: The company benefited from prior bookings of coking coal where prices had declined by $59/t for Q2. Going forward, the company expects coal prices to increase by $11/t in the upcoming quarter.