Tata Steel Surprises Investors with Q2 Profit After Previous Year’s Loss
- Tata Steel announced a profit of ₹833.45 crore for the second quarter of fiscal year 2024.
- The company's revenue decreased by 3.2% year on year to ₹53,904 crore.
- Analysts had expected a loss, making the earnings surprise likely to boost market confidence.
On November 7, 2024, Tata Steel announced a significant profit of ₹833.45 crore for the second quarter of fiscal year 2024, a stark contrast to the ₹6,196.2 crore loss recorded in the same quarter a year earlier. The preceding quarter's loss was heavily influenced by a one-time exceptional loss of ₹6,898.90 crore. Despite the profit increase, the company's revenue from operations fell by 3.2% year on year, amounting to ₹53,904 crore, compared to ₹55,682 crore in the previous year’s corresponding quarter. Analysts had anticipated a considerably lower performance, with expected losses around ₹40 crore. The report indicated improvements in domestic steel deliveries, although pricing pressures persist due to cheap exports from China. Brokerages responded positively to the earnings report, with JP Morgan maintaining an 'overweight' rating on the stock, projecting a price target of ₹180, approximately a 17% upside from the previous session’s close. Morgan Stanley also kept an 'equal-weight' rating, setting a target price of ₹175 and noting that Tata Steel's consolidated EBITDA exceeded their estimates by 38%. Analysts are now eager for insight from management regarding future demand trends and margins for the second half of the fiscal year, as market conditions remain uncertain due to external pricing pressures. Overall, analysts expect favorable market reactions following Tata Steel's earnings surprise against the backdrop of broader challenges faced by Indian steelmakers.