InvestorQ : What led to a sharp turnaround in the performance of Tata Steel in the Decf-20 quarter?
Dhwani Mehta made post

What led to a sharp turnaround in the performance of Tata Steel in the Decf-20 quarter?

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Dilmini Mercia answered.
3 months ago
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Tata Steel, one of the marquee names of the Tata group, registered a sharp turnaround in performance in the Dec-20 quarter. For the quarter, it reported a net profit of Rs.3,678 crore as against a net loss of Rs-1,029 crore in Dec-19 quarter. This sharp turnaround was facilitated by a turnaround in revenues but also because the loss in Dec-19 was due to an exceptional one-time charge in the profit and loss account.

In the latest quarter, sales revenues were up 11.47% at Rs.39,594 crore. But the mix of this growth is a lot more interesting and encouraging. This growth in revenues was led by a recovery in global steel demand and global steel prices. Apart from Tata Steel India, some of the recent NCLT purchases like Tata Steel BSL and Tata Steel Long Products also showed good traction in terms of top line growth.

The key takeaway was that even the beleaguered Tata Steel Europe, which the group has been trying hard to sell out of, put up a good show in the quarter. The OPM expanded four-fold from 4.51% to 18.16% in Dec-20 quarter due to savings in input costs. Tata Steel had taken an exceptional one-time charge of Rs.2,798 crore in Dec-19 quarter on account of discontinued operations, which explains this sharp turnaround in PAT and PAT margins.

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