Tata Steel Q1 Review – Higher Working Capital Didn’t Allow Deleveraging: ICICI Securities

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Tata Steel Ltd.’s consolidated Ebitda was below our estimates at Rs 159 billion (our estimate- Rs 169 billion).

The major miss is Europe with an Ebitda of $89/tonne – expectations were firmed up post peer results.

Further, working capital buildup didn’t allow deleveraging in Q1 FY22, net debt was down marginally at ~Rs 740 billion (Rs 753 billion QoQ) – Rs 83 billion being working capital increase.

Standalone operations reported a beat on the back of forex gains and better than expected raw material performance – Ebitda/tonne increased ~ Rs 8000/tonne QoQ to Rs 35,808/tonne.

With steel prices yet to show meaningful correction, Q1 FY22 was a missed deleveraging opportunity.

Tata Steels’s management has guided for significantly lower net debt by FY22E end.

Click on the attachment to read the full report:

ICICI Securities Tata Steel Q1FY22 Results Update.pdf


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