Tata Steel slips 10% in 5 days post March quarter results

Shares of Tata Steel hit over two-month low of Rs 1,163.60, down 7 per cent on the BSE in Tuesday’s intra-day trade. The decline comes on the back of heavy volumes due to concerns around weak outlook for current quarter (Q1FY23).

In the past five trading days, the stock has declined 10 per cent after the company announced its January-March quarter (Q4FY22) results. Shares of Tata Steel were under pressure despite the board announced a hefty dividend of Rs 51 per fully paid equity share and 10:1 stock split.

With the recent fall, the stock has corrected 24 per cent from its 52-week high level of Rs 1,534.60 that it had touched on August 16, 2021. Earlier, it had hit a 52-week low of Rs 1,050.50 on June 18, 2021.

At 02:56 pm; Tata Steel traded 6.7 per cent lower at Rs 1,168.70, as compared to 0.16 per cent rise in the S&P BSE Sensex. The trading volumes on the counter jumped 1.5 times as 13.01 million equity shares changed hands on the NSE and BSE.

Tata Steel reported 46.8 per cent year-on-year (YoY) increase in consolidated net profit at Rs 9,756 crore for Q4FY22, led by european business. On the other hand, net profit was up by 1.9 per cent, sequentially. Besides this, the company reported 37.32 per cent jump in consolidated profit after tax at Rs 9,835 crore.

Meanwhile, total revenue for the quarter was higher by 38.6 per cent at Rs 69,324 crore compared to Rs 50,028 crore in the year-ago period. CLICK HERE FOR FULL REPORT

On the balance-sheet side, Tata Steel continued to reduce its debt levels, which augured well for the consolidated entity. "As on FY22, on a consolidated basis, Tata Steel’s net debt to EBITDA was at 0.8x (2.44x in FY21) and net debt to equity was at 0.52x (0.98x in FY21)," analysts at ICICI Securities said.

Moreover, analysts at Motilal Oswal Financial Services believe that though Q4, traditionally, is the strongest quarter in terms of demand, sales volumes, prices, and profitability; the company witnessed a complete breakdown of this trend in Q4FY22. "Prices remained sluggish in the first half of Q4FY22 as international prices continued to slide. A fresh wave of COVID-19 cases in China and a slowdown there impacted steel prices, which continued to correct in January’22, before recovering in February’22," the brokerage firm added.

On the other hand, the company had undertaken a strong price push in Mar’22 due to massive jump in coking coal prices and resurgence in domestic demand. "Steel mills have been able to pass-through a majority of the cost push in Q4FY22, though the outlook for Q1FY23 looks murkier," the brokerage firm said.