Tata Metaliks reported a net profit of Rs 14.29 crore in Q2 FY23, down by 73.8% from Rs 54.62 crore recorded in Q2 FY22.
Revenue from operations increased by 36% YoY to Rs 876.98 crore during the quarter. This was driven by higher sales volume of both Pig Iron (PI) and Ductile Iron (DI) Pipe by approximately 23% and approximately 52%, respectively, despite the disruption for 4-5 days due to rail & road agitation in Kharagpur.
Total expenses jumped by 53.3% to Rs 836.06 crore in the second quarter as compared with the same period last year. This mainly on account of higher raw material prices (up 61.1% YoY) and higher other expenses (up 39.3% YoY).
EBITDA declined by 55.6% to Rs 45.71 crore in Q2 FY23 from Rs 102.91 crore in Q2 FY22.
Profit before tax in Q2 FY23 stood at Rs 20.13 crore, down by 75.1% from Rs 80.81 crore in Q2 FY22.
The company registered stable and improved plant performance, which resulted in higher hot metal production QoQ by approximately 25%. DI Pipe production also increased sequentially by approximately 40% as additional volumes became available with the ramping up of the new DI Pipe plant.
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Realisation of PI saw a QoQ drop of approximately 11% due to oversupply in domestic market as a result of virtual stoppage of exports post imposition of export duty on PI at 15% from May-22. Realisation of DI Pipe, on the other hand, increased by approximately 3% compared to Q1.
Sandeep Kumar, managing director of Tata Metaliks, said: The company has been able to bounce back after a weak performance in Q1, with both PI and DIP business delivering much higher volumes than Q1.
The new DI Pipe plant has been ramping up well and higher volumes are expected to come from it in Q3. Pig Iron market demand is expected to continue to be under pressure due to oversupply in domestic market although post festive season, demand and utilization levels are expected to be better from Nov'22.
Coal price (FOB Australia) is likely to remain range bound with possibility of marginal uptick in Q3 as indicated by trend of Coal futures. The demand outlook for DI Pipes for H2 is robust in line with the Govt's increased outlay through Jal Jeevan Mission for providing drinking water to the population.
H2 is traditionally a much better period for DI pipe with demand picking up and will be supported by additional volumes from the new DI Pipe plant.
Tata Metaliks is a subsidiary of Tata Steel. It has its manufacturing facilities at Kharagpur, West Bengal, India which produces Pig Iron and Ductile Iron Pipes. The plant annually produces around 600,000 tonnes of hot metal, out of which over 200,000 tonnes is converted into DI Pipes and the rest into Pig Iron.
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