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Tata Steel: Improved Results, Debt Worries Remain

Tata Steel Ltd (TATA IN)’s latest quarterly results beat our expectations. The company’s revenue for Q2FY19 (which ended in September) rose 15% YoY, with EBITDA during the same period rising nearly 50% YoY. This growth reflects a good operating and market performance during the quarter. The company has also benefitted from the amalgamation of previously-acquired Bhushan Steel (BHUS IN) (BSL). At the same time, gross debt during Q2FY19 increased by INR20.65bn compared to the previous quarter. The total comprehensive income has declined from INR36.81bn in Q1FY19 to INR13.05bn during Q2FY19. The company has seen a c.13% decline in its share price between 15-November-2018 and 07-December-2018 due to falling steel prices in China as well as slowing demand in the Indian market.

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