Shares of Tata Steel rose nearly 3% in early trade on Monday, in line with broader market, after the country’s largest steel maker unveiled an investment plan for the current financial year. The Tata Group company has set a capital expenditure (capex) target of ₹12,000 crore for its India and Europe operations for the financial year 2022-23 (FY23), its CEO T.V. Narendran said.
Tata Steel plans to invest ₹8,500 crore in India and ₹3,500 crore on its operations in Europe, Narendran told a media agency. Besides, the steel maker also proposes to spend another ₹12,000 crore in the Odisha-based steel maker Neelachal Ispat Nigam Ltd (NINL), which it has acquired recently through its wholly-owned subsidiary, Tata Steel Long Products Limited (TSLP).
Earlier this month, the strategic disinvestment of NINL was completed on Monday, with the government transferring 93.7% stake in NINL, in which MMTC was the largest shareholder, to TSLP. Tata Steel has completed the acquisition and as a result NINL has become a subsidiary of TSLP and an indirect subsidiary of Tata Steel. The transaction has been completed for a consideration of ₹12,100 crore as per the terms and conditions of the share sale and purchase agreement entered on March 10, 2022 and in accordance with the process being run by Department of Disinvestment and Public Asset Management (DIPAM).
Buoyed by the capex investment plan, Tata Steel shares climbed as much as 2.6% to hit a high of ₹906.55 on the BSE. Earlier today, the index heavyweight opened higher at ₹894.95, against the previous closing price of ₹883.60, in sync with BSE benchmark Sensex. At the time of reporting, the 30-share Sensex was trading 556 points higher at 54,317 levels.
Meanwhile, Tata Steel has informed exchanges that its board is set to meet on July 25 to consider and approve financial results of the company for the first quarter ended June 30, 2022.
In the last financial year 2021-22 (FY22), Tata Steel had pipped Tata Consultancy Services (TCS), the country’s second most valued firm, to emerge as the most profitable Tata Group company. The steelmaker clocked a consolidated net profit of ₹41,749 crore in the last fiscal, overtaking that of TCS, the country's largest software services provider and the crown jewel of Tata Group, which posted a net income of ₹38,327 crore during FY22. It had posted a consolidated net profit of ₹9,835 crore in the fourth quarter ended March 2022. The company recorded the highest-ever earnings before interest tax depreciation and amortisation (EBITDA) of ₹63,830 crore in the last fiscal. The company's net debt declined to ₹ 51,049 crore from over ₹1 lakh crore in early 2020. The net debt to EBITDA improved to 0.8 times and net debt to equity improved to 0.52 times. The Consolidated free cash flow of the company stood at ₹27,185 crore despite an increase in working capital of ₹9,618 crore, capex of ₹10,522 crore and taxes of ₹11,902 crore.
