scorecardTata Steel’s net profit declines in Q1 on the back of rising raw material costs
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Tata Steel’s net profit declines in Q1 on the back of rising raw material costs

Tata Steel’s net profit declines in Q1 on the back of rising raw material costs
Stock Market3 min read
  • Tata Steel’s revenues from operations rose by 18.6% to ₹63,430 crore in the June quarter of 2022.
  • Net profit declined 12.83% to ₹7,764.96 crore in the June quarter.
  • The company’s raw material cost higher by ₹6,446 crore
Tata Steel on Monday reported a sharp decline in its consolidated profit in the first quarter of fiscal year 2023, even as its revenues from operations rose by 18.6% to ₹63,430 crore. The company’s operational revenue stood at ₹53,465 crore last year in the same quarter.

On a sequential basis, the consolidated revenues have declined 8.5% from ₹69,324 crore during the previous quarter. However, its operating income increased on a per ton basis primarily due to market expansion in Europe.

“This has been a challenging quarter for the Global and Indian economy with rising interest rates, supply chain constraints and slowdown in China due to COVID. Despite these multiple headwinds, Tata Steel has delivered a strong performance with an improvement in margins," Tata Steel CEO and MD TV Narendran said.


April-June 2022

January-March 2022

April-June 2021

Operational Revenue

₹63,430 crore

₹69,324 crore

₹53,465 crore

Net Profit

₹7,764.96 crore

₹8,907 crore

₹9,756 crore

EBITDA

₹15,047 crore

₹15,174 crore

₹16,185 crore


Tata Steel’s net profit stood at ₹7,764.96 crore for the June quarter, representing a decline of 12.83% compared to ₹8,907 crore posted in the same quarter last year. Its profit declined by 20% from ₹9,756 crore achieved during the January-March quarter this year.

This decline in profit comes on the back of rising cost of raw materials. The company’s raw material cost increased by over ₹11,000 crore, from ₹19,956 crore to ₹31,319 crore in a span of one year, even though the steel production declined marginally. The raw material cost grew by more than ₹6,000 crore compared to ₹24,873 crore three months ago.

Tata Steel, in its investors presentation, noted that the raw material cost “ increased primarily due to higher coking coal consumption cost across key entities”. The raw material cost stood at ₹19,956 crore in the June quarter of last year.

Its employee benefits expense actually declined from ₹1,723 crore in March quarter to ₹1,540 crore in the June quarter. Meanwhile, its other expenses have declined by ₹1,334 crore due lower power costs, consumption of stores and spares.

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