This high-debt-ridden Tata Stock has recently announced layoffs of around 1,600 people in management and support roles amid restructuring plans for its loss-making plant based in Nederland.
SHARE PRICE MOVEMENT
With a market capitalization of Rs. 1,67,090 Crore, the stock of Tata Steel opened at Rs. 135, up 6 percent from yesterday’s close, and the opening is also high for the stock. Additionally, the Yearly return for the stock is -19 percent, and the past 5-year return is an impressive 370 percent
ABOUT THE COMPANY
Tata Steel Limited is one of the world’s leading steel producers, headquartered in Mumbai, India, with primary operations based in Jamshedpur, Jharkhand. Founded in 1907, it was Asia’s first integrated private steel company and played a pivotal role in developing India’s first industrial city at Jamshedpur.
As a subsidiary of the Tata Group, Tata Steel has grown into a global steelmaker with a significant presence across India, Europe, and Southeast Asia. The company operates integrated steelmaking sites in India, the Netherlands, and the UK and has downstream facilities across Europe.
UPDATE FROM COMPANY
The company has stated they need a more effective organisational structure for Tata Steel Nederland (TSN) that will have more accountability, standardization, automation, and elimination of duplication. The company states that this restructuring will lead to a loss of ~1600 management and support roles.
The company also gave updates on its Nederland plant, stating that their operations have recovered with liquid steel production volumes near capacity at 6.75 (Million Tonnes Per Annum) MTPA, which was impacted in FY2024.
They also mentioned the challenging demand conditions in Europe, which are driven by geopolitical developments, trade and supply chain disruptions, and escalating energy costs. These disruptions have affected the operating costs and the financial performance of the company and the plant.
COMPANY’S HIGH DEBT
As of the September Quarter, the Company’s total borrowings stand at Rs. 99,392 Crore, out of which long-term borrowings stand at Rs. 67,148 Crore, short-term borrowing at Rs. 26,960 Crore, and Lease liabilities at Rs. 5,284 Crore.
This high debt can be attributed to the company’s and the sector’s capital-intensive operations and strategic business practices. However, the company has taken measures to manage its debt.
FINANCIAL HIGHLIGHTS
The company reported a 3.00 percent YoY increase in revenue from Rs. 55,312 Crore in Q3FY24 to Rs. 53,648 Crore in Q3FY25. On a QoQ basis, the company reported a decrease of 0.47 percent in revenue from Rs. 53,905 Crore in the previous quarter.
Their Net profit saw a decrease of 43.48 percent YoY from Rs. 522 Crore to Rs. 295 Crore for the same period. On a QoQ basis, the company reported a decrease of 61.13 percent in Net profit from Rs. 759 Crore in the previous quarter.
Written By Abhishek Das
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