This Tata Group Company's Net Profit Drops 99%!

Hardly do we see a Tata group company being in the news for any managerial concerns, bad results, or corporate governance issues.

This week though, a Tata group company from the metal space reported dismal performance.

The company in question is Tata Metaliks - a subsidiary of Tata Steel, and one of India's leading producers of high-quality pig iron and ductile iron pipes.

The results were so bad that the company's share price fell 8% on the day it reported its Q1 results.

Here are four key takeaways from Tata Metaliks' Q1 results.

• Tata Metaliks' net profit fell to Rs 12.2 m in the June 2022 quarter as compared to Rs 947.2 m in the same quarter a year ago.
  
  The sharp fall in bottomline was mainly on account of higher expenses on account of a surge in raw material costs.
• Expenses rose to Rs 6,677.2 m in Q1 from Rs 4,716.2 m a year ago.
• Tata Metaliks' revenues for the quarter came in at Rs 6,693.5 m as compared to Rs 6,064.5 m in the same quarter last year.
• In an exchange filing, the company said its pig iron business got adversely impacted due to lower production and higher cost arising out of the annual maintenance shutdowns as well as a significant increase in coal, coke, and consumable prices.
  
  The profitability was also impacted by the government's decision to impose a 15% export duty on pig iron.

This is the second consecutive quarter in which company reported dismal performance.

In the March 2022 quarter, Tata Metaliks had reported a 30% fall in its net profit to Rs 524.6 m, again due to a rise in expenses.

However, the coming quarters might turn out to be good for the company.

In a recent interview, Tata Metaliks' MD Sandeep Kumar was asked about the outlook to which he replied,

• With the new plant commissioned, we will have a higher volume from the new plant, to the extent of 50,000-60,000 or maybe 70,000 tons in this year because most of it will come in the second half.
  
  The commissioning has been done but obviously it takes time to ramp up and it is only the first phase of the plant. The second phase of the plant will come in next year.

How Tata Metaliks has performed recently

Not very good to be honest.

Shares of Tata Metaliks have been beaten down big time and are presently trading close to their 52-week low level.

On a YTD basis, they are down 17% while the past one year's performance is even bad at losses of 45%.

At the current price, the company trades at a PE multiple of 15.3 and a price to book value multiple of 1.5 times.

Of late, mutual funds seem to have turned bearish on the company as they have been selling stake for the past few quarters.

Same is the case with FIIs.

To know more, check out Tata Metaliks latest shareholding pattern.

About Tata Metaliks

Tata Metaliks was set up as a joint venture between Tata Steel and West Bengal Industrial Development Corporation in 1991 to manufacture pig iron.

It is a part of the Tata group, with Tata Steel owning 60% of the company.

To know more about the company, check out Tata Metaliks financial factsheet and its latest quarterly results.

For a sector overview, read our steel sector report.

You can also compare Tata Metaliks with its peers.

Tata Metaliks vs Tata Steel Long Products

Tata Metaliks vs Jindal Steel

Tata Metaliks vs Chennai Ferrous

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...