India: Tata Steel sees rise in production, sales in Q3FY'24

Tata Steel's production and sales volumes increased q-o-q in Q3FY'24 owing to strong domestic demand. During the quarter, the company allocated INR 4,715 crores towards capital expenditures, and for the 9MFY'24, the total capital expenditure amounted to INR 13,357 crores.

Project updates

The phased commissioning of the 5 MTPA expansion at Kalinganagar has been initiated, with the commencement of production at Steel Melting Shop 2 (SMS2). Additionally, the commissioning of the 6 MTPA capacity Pellet plant at Kalinganagar has been successfully completed. Furthermore, the commissioning of the 2.2 MTPA CRM complex has been accomplished, and production of Full Hard Cold Rolled Steel (FHCR) coils has commenced.

Other highlights:

Production increased q-o-q: Tata Steel's standalone crude steel production exhibited robust growth, increasing by 7%y-o-y and q-o-q to reach 5.35 million tonnes (mnt) in the third quarter of fiscal year 2024 (3QFY'24). This marks a significant improvement from the 5.02 mnt produced in the previous quarter (2QFY'24) and 5 mnt in the corresponding quarter of the prior year (3QFY'23).

Sales inched up q-o-q: The company's sales experienced a modest 1% q-o-q increase, reaching 4.88 mnt in Q3FY'24 compared to 4.82 mnt in Q2FY'24. On an annualized basis, this reflected a 3% growth as opposed to 4.74 mnt in the corresponding period last year (CPLY).

Export volumes exhibited a notable decline, dropping by 50% q-o-q to 0.10 mnt in Q3FY'24 from 0.20 mnt in Q2FY'24. On a y-o-y basis, exports plummeted by 74%, down from 0.38 mnt in Q3FY'23.

In the domestic sales segment for the current quarter, the automotive sector saw an 8.3% q-o-q expansion, contributing 0.78 mnt in Q3FY'24. The industrial products and projects segment also experienced a 4.8% increase, reaching 1.96 mnt. Meanwhile, the branded products and retail sector showed a marginal 0.6% q-o-q growth, totalling 1.63 mnt.

EBITDA increase q-o-q: The standalone earnings before interest, tax, depreciation, and amortization (EBITDA) of the company demonstrated a q-o-q growth of 20%, reaching INR 8,302 crore in Q3FY'24, compared to INR 6,920 crore in the previous quarter. Additionally, on a y-o-y basis, EBITDA experienced a substantial surge, increasing by 70% from INR 4,892 crores in Q3FY'23.

Net sales realisations (NSR): The company's realisations increased by INR 1,100/t in Q3FY'24. However, the company expects realisations to fall by INR 1,000/t in Q4FY'24.

Raw material prices remain flat: The decline in raw material costs was primarily attributable to fluctuations in the inventory value of chrome ore; excluding this factor, raw material costs remained flat. Notably, coking coal prices saw an increase of $4/t in Q3FY'24. Looking ahead, the company anticipates an increase in coal prices by $10/t in the forthcoming quarter.

Note: All Figures are mentioned in standalone basis (include Tata Steel Long Products Limited, Tata Steel Mining Limited, Tata Metaliks Limited, Tinplate Company of India Limited, S&T mining and Neelachal Ispat Nigam)