Tata Steel Q1 Review – European Profitability Strong: IDBI Capital

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Tata Steel Ltd.’s Q1 FY23 Ebitda was 10% ahead of our forecast. Although India sales volumes fell by 20% QoQ to 4.07 million tonnes, Ebitda/tonne fell by only 2% QoQ to Rs 23,509.

Further, Tata Steel’s European operations profitability was stronger than expected as Ebitda/tonne jumped 56% QoQ to Rs 28,220 on account of higher realisations and improved product mix.

Consolidated net debt increased by Rs 35 billion QoQ to Rs 545 billion. Broadly, we maintain our estimates for FY23-24.

Looking ahead, the European operations are likely to benefit from supply constraints (due to ongoing Russia-Ukraine conflict) which provide strong visibility on cashflows.

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