Tata Steel Q1FY20 Results - Key Takeaways

1.Crude steel output remains stable at Q1FY20- Tata Steel’s crude steel output remain stable at 4.50 MnT in Q1FY20 as compared 4.48 MnT in previous quarter. However on yearly basis the same surged by 24% in Q1FY20 as compared to 3.64 MnT in Q1FY19.

2.Steel deliveries decline by 16% in Q1FY20- Tata Steel, India deliveries move down by 16% in Q1FY19 to 3.96 MnT as compared to 4.72 MnT in previous quarter. However on yearly basis the same increased by 19% in Q1 as compared to 3.34 MnT in similar time frame of previous year.

3.Export deliveries decline significantly in Q1FY20- Company’s export deliveries drop sharply in Q1FY20 to 0.31 MnT which was 0.70 MnT in previous quarter. However on yearly basis the same jumped against 0.17 MnT in similar quarter of previous year.

4.Tata BSL Steel consolidated performance in Q1FY20- In Q1FY20, Tata steel BSL crude steel output stood at 1.12 up by 9% Q-o-Q against 1.03 MnT in previous quarter.Also deliveries stood at 0.86 MnT decline by 25% as compare to 1.14 MnT in previous quarter.

5.Tata Steel EBITDA reduced by 17% in Q1FY19- In India,Tata Steel EBITDA stood at INR 4,098 Cr move down by 17% as compared to INR 4,953 Cr in previous quarter.However on yearly basis the same move down by 20% as compared to INR 5,118 Cr in same time frame of previous year.

6. Expect steel demand to improve in 2nd half of the year- Company officials believes that domestic demand will remain good in upcoming quarters due to improved spending on infrastructure and construction sector.Also auto sales will start to pick up in second half of FY20 amid festive season. Also expect coal prices and iron ore prices to be softer in upcoming quarters.

7. Domestic steel prices reported plunged in Q1- Domestic HRC prices decline by around INR 3000-3500/MT in Q1FY20 as compared to previous quarter amid seasonal slowdown and weakening consumer sentiments in domestic market. However prices are expected to remain soft in Q2 and may pick up in next quarters driven by demand from auto and construction sector.

8.Usha Martin to start pellet operations in Oct-Nov’19- In Q1FY20 earnings con call company officials shared that Usha martin to start pellet operations by Oct-Nov’19 in order to supply iron ore from own captive mines and to lower the sourcing rom merchant market.

9.Coking coal consumption cost likely to lower in Q2- Coking coal consumption cost is likely to lower by USD 4-5/MT in Q2FY20 compared to Q1FY20.

10.Ongoing expansion in Kalinganagar Phase-2- Tata Steel Kalinganagar Phase-2 expansion project is underway. Kalinganagar 5MnTPA Phase II expansion is underway; commissioning of CRM complex and pellet plant is being prioritized. The 2.2 MnT tons CRM complex and pellet plant has been prioritized to improve product mix and reduce costs.

11.Slowdown in automotive and special products sales in Q1FY20- In Q1FY20, auto and special products sales decline by 10% to 0.54 MnT which was 0.49 MnT in previous quarter.Meanwhile branded products and retail stood at 1.30 MnT in Q1 fell by 7% as compared to 1.40 MnT in previous quarter.Also industrial products and projects plunged by 18% to 1.52 MnT in Q1 against 1.85 MnT in previous quarter.

12.Tata BSL reported highest ever quarterly sales in Q1FY20- Tata steel BSL achieved highest ever quarterly sales of coated products at 1,20,000 MT upsurge by 18% in Q1FY 20 compared to Q4FY19.

13. Successful acquisition of Usha Martin Limited- On 9th April 2019, Tata Sponge Iron Limited successfully acquired steel business of Usha Martin Limited. Supply from captive iron ore has commenced from July 2019 and is expected to ramp up in next couple of months. Plant availability has improved with restart of the blast furnace, which was down in April 2019.Thus crude steel production stood at 0.12 MnT and production of sponge stood at 0.172 MnT in Q1FY20.