Tata Metaliks’ Q2 net jumps 250% on back of improved delivery

Tata Steel subsidiary Tata Metaliks (TML) reported a 250% jump in its net profit at Rs 82 crore for the quarter up to September FY 21, as against net profit of Rs 23.39 crore during the corresponding period last fiscal.

The jump came on the back of increased supplies of pig iron and ductile iron (DI) pipes after a muted performance in the first quarter due to the lockdown. The company’s second quarter deliveries of pig iron grew 170%, while those of DI pipes grew 80% compared to the first quarter.

The company clocked a revenue of Rs 520 crore in Q2, more than 71% of the revenue earned in the half-yearly period. For the half-yearly period, the company clocked a revenue of Rs 730 crore, while its net profit stood at Rs 69.64 crore, an increase of 61% year on year.

In the first quarter, TML had reported a loss of Rs 12.36 crore. “The company has had an almost vertical ramp up of production and sales in both its businesses despite the continuing uncertainty caused by the pandemic. In Q2, the company has bounced back with the blast furnaces delivering robust performance in terms of higher productivity, reduced fuel rates and higher coal injection rates,” Sandeep Kumar, Tata Metaliks managing director, said.

Demand for DI pipes may remain under pressure until the government’s infrastructure spending picks up, Kumar said. Demand for pig iron is likely to continue during the third quarter, but since raw material prices are rising, price realisation from finished goods would be under pressure, he said.

The company’s Ebitda during the quarter under review grew to Rs 111.66 crore from Rs 46.74 crore in the same period in FY20. This increase is mainly attributable to higher spreads between raw material and finished goods prices, as well as reduction in structural and operational costs. Its first quarter Ebitda in the current fiscal was only Rs 11.25 crore. Ebitda for the half-yearly period during the fiscal also improved year on year to Rs 122.91 crore from Rs 96.09 crore during the same period last fiscal.

Earnings per share during the quarter improved to Rs 28.96 from Rs 8.32 during the corresponding quarter last fiscal. In the first quarter of the current fiscal, EPS was negative Rs 4.40.

Kumar said the company focused on conserving cash and has been successful in bringing down its quarter-to-quarter net borrowing. Tata Steel infused Rs 168 crore in TML against preferential allotment of equity shares. “TML today stands at zero debt and [is] cash positive,” Kumar said.