Tata group stock with presence across the entire value chain of steel manufacturing from mining and processing iron ore and coal, to producing and distributing finished products in focus after it declared its Q1FY25 results with a 75 percent jump in Net Profits.
Price action
With a market capitalization of Rs. 2,04,416 Crores, the shares of Tata Steel Limited were trading at Rs. 163.75 per equity share, down 1 percent from its previous day’s close price of Rs. 165.35.
About the Company
Tata Steel Limited has a presence across the entire value chain of steel manufacturing from mining and processing iron ore and coal to producing and distributing finished products. Its product portfolio includes hot-rolled coils, galvanized steel, wire rods, tubes, and many more.
Q1FY25 Results
Its Revenue from operations declined by 8 percent YoY from Rs. 59,489.66 Crores in Q1FY24 to Rs. 54771.39 Crores in Q1FY25 and it declined by 6.67 percent QoQ from Rs. 58,687.31 Crores in Q4FY24 to Rs. 54,771.39 Crores in Q1FY25.
Its Net Profit grew by 75 percent YoY from Rs. 524.85 Crores in Q1FY24 to Rs. 918.57 Crores in Q1FY25 and it grew by 66 percent QoQ from Rs. 554.56 Crores in Q4FY24 to Rs. 918.57 Crores in Q1FY25.
Operational Updates
The Crude steel production was around 5.27 million tons and was up 5 percent on a YoY basis. Deliveries stood at 4.94 million tons and were up on a YoY basis, driven by a 4 percent rise in domestic deliveries.
At the segment level, Automotive witnessed ‘best ever 1Q’ sales, and Tata Tiscon deliveries were up 15 percent YoY leading to best-ever quarterly sales.
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Other Highlights
The board of directors has considered and approved to infuse in one or more tranches, an amount up to Rs. 35 crores and execute a Share Purchase & Shareholders’ Agreement with Tata Power Renewable Energy Limited and its wholly owned subsidiary TP Parivart Limited to acquire and hold 26 percent equity stake in TP Parivart Limited.
It has also Considered and approved the proposal to infuse funds, in one or more tranches, up to Rs. 6,000 crores, by way of subscription to equity shares of Neelachal Ispat Nigam Limited
The board of directors has considered and approved the Scheme of Amalgamation between Rujuvalika Investments Limited, a wholly-owned subsidiary of the Company, and Tata Steel Limited. Rujuvalika Investments Limited is involved in Activities auxiliary to financial intermediation, except insurance and pension funding.
Brokerage View
JP Morgan has maintained an Overweight call on the stock with a target price of Rs 190 and said that first-quarter EBITDA beat overall, while India and Europe performed slightly better than expected.
It doesn’t see any negatives from Q1, however, net debt moved higher by 6 percent QoQ, and the management’s commentary on debt reduction will be important. It doesn’t anticipate any major revisions to consensus estimates
Written by: Bharath K.S
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