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Revenue
₹55,682 Cr
verified against source
Revenue YoY
—
reported change
EBITDA
₹4,315 Cr
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
Tata Steel's Q2 FY24 consolidated EBITDA of INR 4,315 crore (8% margin) was dragged by deep losses in Europe, with UK EBITDA loss of GBP 132 million and Netherlands loss of EUR 110 million. India standalone EBITDA was INR 6,917 crore (19% margin), supported by stable demand and lower coking coal costs. The UK restructuring plan (EAF transition at Port Talbot) triggered a INR 12,961 crore impairment in standalone books. Management guided India realizations up INR 2,200/ton QoQ in Q3, but Europe remains challenged until Netherlands blast furnace relining completes in Q3. Key risk: prolonged weakness in European spreads and execution risk in UK transition could delay cash flow breakeven.
Colored figures show movement against the previous available record.
Guidance to track
- Management guided a sequential improvement of INR 2,200 per ton in India net realizations in Q3 FY24, aided by resilient domestic demand.
- After blast furnace relining completion in Q3, Netherlands is expected to turn EBITDA positive in Q4 FY24.
- Management aims to run the UK business in transition such that it is cash neutral or cash positive, excluding one-time restructuring costs.
- Tata Steel plans to reach 40 million tons of India capacity by 2030 through expansions at Kalinganagar, Neelachal, Bhushan, and EAF projects.
Risks flagged
- Current spot spreads in Europe are low due to high coking coal prices and subdued demand, which could delay the turnaround in Netherlands and UK.
- The UK transition plan is subject to union consultation and regulatory approvals; delays or higher-than-expected costs could increase cash outflows.
- China's elevated steel exports (~8 million tons/month) are depressing international prices, which could spill over into India and impact realizations.
- Despite strong India cash flows, net debt increased by INR 5,600 crore QoQ; management expects it to stay around current levels for the next two quarters.
Key quotes
- The restructuring and the transition would commence after this consultation. Given our proposed plan to change the business model and the route for steelmaking, the existing heavy end assets at Tata Steel UK will only be used for a defined period.
- In India, net realizations are expected to improve by about INR 2,200 per ton, quarter-on-quarter, aided by domestic demand, which has showed great resilience despite the renewed volatility in the global sentiment.
- The larger concern to me is less of Chinese imports into India, more of Chinese exports across the world, because that's, already 8 million tonnes for the last few months, which is not a good situation, from an international price point of view.
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