Tata Steel FY24 Annual Earnings Summary
4 quarters covered · ₹2,29,171 Cr revenue · ₹-4,909 Cr PAT · 10.3% average EBITDA margin.
Quarter-by-quarter progression
Management promises made during the year
Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q2 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q2 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q2 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q3 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q3 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q4 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q4 FY24Risks flagged during the year
UK operations face end-of-life assets and ongoing losses; management indicated decisive action in H2, which may involve significant cash costs.
Q2 FY24 · highCurrent spot spreads in Europe are low due to high coking coal prices and subdued demand, which could delay the turnaround in Netherlands and UK.
Q2 FY24 · highThe UK transition plan is subject to union consultation and regulatory approvals; delays or higher-than-expected costs could increase cash outflows.
Q3 FY24 · highPhased closure of blast furnaces and transition to EAF by 2027 faces execution challenges, including union negotiations and grid infrastructure.
Q4 FY24 · highClosure of blast furnaces by June/September 2024 may face operational or regulatory delays; grant funding agreement not yet signed.
Q1 FY24 · mediumChina exported ~8 million tons/month, the highest since 2016, depressing global steel prices and impacting realizations.
Q1 FY24 · mediumWorking capital increased by ₹2,500 crore in Q1 due to price effects; achieving $1 billion debt reduction target may be challenged by capex and Europe cash needs.
Q1 FY24 · mediumEnergy hedges taken at higher prices will continue to impact costs in Q2 before easing in H2; quantum of impact not quantified.
Q2 FY24 · mediumChina's elevated steel exports (~8 million tons/month) are depressing international prices, which could spill over into India and impact realizations.
Q2 FY24 · mediumDespite 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.
Q3 FY24 · mediumCoking coal costs are expected to rise $10 QoQ in Q4, and further increases could pressure margins.
Q3 FY24 · mediumHigh Chinese steel exports could depress global prices and impact Tata Steel's realizations.
What changed through the year
Q1 FY24 · Q2 India realization decline of ₹3,100/ton
Net realizations in India expected to drop by about ₹3,100 per ton quarter-on-quarter due to falling international prices and seasonality.
Q1 FY24 · Q2 Europe realization decline of GBP 38/ton
Net realizations in Europe expected to drop by about GBP 38 per ton quarter-on-quarter.
Q1 FY24 · Netherlands EBITDA positive in H2 FY24
Management expects Netherlands business to be EBITDA positive in the second half of FY24, with full-year positive EBITDA.
Q1 FY24 · Net debt/EBITDA target of 2.5x by year-end
Management aims to bring net debt/EBITDA back to 2.5x by end of FY24, from 2.9x in Q1.
Q2 FY24 · India net realizations expected up INR 2,200/ton QoQ in Q3
Management guided a sequential improvement of INR 2,200 per ton in India net realizations in Q3 FY24, aided by resilient domestic demand.
Q2 FY24 · Netherlands EBITDA positive from Q4 FY24
After blast furnace relining completion in Q3, Netherlands is expected to turn EBITDA positive in Q4 FY24.
Q2 FY24 · UK transition to be cash neutral during transition period
Management aims to run the UK business in transition such that it is cash neutral or cash positive, excluding one-time restructuring costs.
Q2 FY24 · India capacity target of 40 million tons by FY30
Tata Steel plans to reach 40 million tons of India capacity by 2030 through expansions at Kalinganagar, Neelachal, Bhushan, and EAF projects.
Q3 FY24 · India realizations expected ~INR 1,000 lower QoQ in Q4
Management guided for a sequential decline in net realizations in India for Q4 FY24.
Q3 FY24 · Coking coal consumption cost ~$10 higher QoQ in Q4
Coking coal cost on consumption basis expected to increase by about $10 per ton in Q4.
Q3 FY24 · UK losses to be halved in FY25 vs FY24
Management expects to significantly reduce UK losses next year, targeting a 50% reduction.
Q3 FY24 · Netherlands to be EBITDA positive in FY25
Management expects Netherlands operations to turn EBITDA positive next financial year.
Q4 FY24 · India volume growth of 1.4 million tons in FY25
Consolidated volume guidance of 1.4 million tons increase, driven by Kalinganagar expansion (1.7 million tons) offset by Jamshedpur BF reline.
Q4 FY24 · Capex of INR 16,000 crore in FY25
Total capex guidance of INR 16,000 crore, with 75% allocated to India for Kalinganagar expansion and downstream projects.
Q4 FY24 · UK cash breakeven by H2 FY25
UK operations expected to be cash neutral in the second half of FY25, with full-year EBITDA positive in FY26.
Q4 FY24 · Net debt/EBITDA below 2.5x by FY25 end
Management targets net debt to EBITDA ratio below 2.5x by end of FY25, assuming market conditions remain at cycle bottom.