TATA STEEL 2021-22 Annual Report Analysis

Wed, 8 Jun

TATA STEEL has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

TATA STEEL Income Statement Analysis

• Operating income during the year rose 55.9% on a year-on-year (YoY) basis.
• The company's operating profit increased by 115.0% YoY during the fiscal. Operating profit margins witnessed a fall and down at 26.0% in FY22 as against 18.8% in FY21.
• Depreciation charges decreased by 1.4% and finance costs decreased by 28.2% YoY, respectively.
• Other income declined by 12.4% YoY.
• Net profit for the year grew by 422.7% YoY.
• Net profit margins during the year grew from 5.0% in FY21 to 16.8% in FY22.

TATA STEEL Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	1,564,774	2,439,592	55.9%
Other income	Rs m	8,956	7,849	-12.4%
Total Revenues	Rs m	1,573,730	2,447,441	55.5%
Gross profit	Rs m	294,611	633,559	115.0%
Depreciation	Rs m	92,336	91,009	-1.4%
Interest	Rs m	76,067	54,622	-28.2%
Profit before tax	Rs m	135,164	495,777	266.8%
Tax	Rs m	56,539	84,776	49.9%
Profit after tax	Rs m	78,625	411,002	422.7%
Gross profit margin	%	18.8	26.0
Effective tax rate	%	41.8	17.1
Net profit margin	%	5.0	16.8

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TATA STEEL Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 906 billion as compared to Rs 709 billion in FY21, thereby witnessing an increase of 27.8%.
• Long-term debt down at Rs 448 billion as compared to Rs 657 billion during FY21, a fall of 31.9%.
• Current assets rose 54% and stood at Rs 926 billion, while fixed assets rose 3% and stood at Rs 1,899 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 2,824 billion as against Rs 2,439 billion during FY21, thereby witnessing a growth of 16%.

TATA STEEL Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	742,350	1,144,430	54.2
Current Liabilities	Rs m	708,671	905,880	27.8
Long-term Debt	Rs m	656,980	447,641	-31.9
Total Liabilities	Rs m	2,439,092	2,824,217	15.8
Current assets	Rs m	602,119	925,566	53.7
Fixed Assets	Rs m	1,836,973	1,898,651	3.4
Total Assets	Rs m	2,439,092	2,824,217	15.8

TATA STEEL Cash Flow Statement Analysis

• TATA STEEL's cash flow from operating activities (CFO) during FY22 stood at Rs 444 billion, an improvement of 0.1% on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -109 billion, an improvement of 16.7% on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -234 billion, an improvement of 37% on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 101 billion from the Rs -22 billion net cash flows seen during FY21.

TATA STEEL Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	443,267	443,810	0.1%
Cash Flow from Investing Activities	Rs m	-93,229	-108,812	-
Cash Flow from Financing Activities	Rs m	-370,897	-234,011	-
Net Cash Flow	Rs m	-22,003	100,749	-

Current Valuations for TATA STEEL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 336.6, an improvement from the EPS of Rs 65.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,085.3, stands at 3.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.2 times, while the price to sales ratio stands at 0.5 times.
• The company's price to cash flow (P/CF) ratio stood at 2.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	1,300.8	1,997.7
TTM Earnings per share	Rs	65.4	336.6
Diluted earnings per share	Rs	64.3	336.2
Price to Cash Flow	x	5.8	2.9
TTM P/E ratio	x	12.6	3.2
Price / Book Value ratio	x	0.9	1.3
Market Cap	Rs m	646,312	1,436,867
Dividends per share (Unadj.)	Rs	25.0	51.0

Ratio Analysis for TATA STEEL

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.0x during FY22, from 0.8x during FY21. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 10.1x during FY22, from 2.8x during FY21. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 35.9% during FY22, from 10.6% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 34.6% during FY22, from 15.1% during FY21. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 16.5% during FY22, from 6.3% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	0.8	1.0
Debtors’ Days	Days	2	2
Interest coverage	x	2.8	10.1
Debt to equity ratio	x	0.9	0.4
Return on assets	%	6.3	16.5
Return on equity	%	10.6	35.9
Return on capital employed	%	15.1	34.6

To see how TATA STEEL has performed over the last 5 years, please visit here.

TATA STEEL Share Price Performance

Over the last one year, TATA STEEL share price has moved down from Rs 1,110.5 to Rs 1,085.3, registering a loss of Rs 25.2 or around 2.3%.

Meanwhile, the S&P BSE METAL Index is trading at Rs 18,287.0 (up 1.1%). Over the last one year it has moved down from 18,770.5 to 18,287.0, a loss of 484 points (down 2.6%).

Overall, the S&P BSE SENSEX is up 5.6% over the year.

(To know more, check out historical annual results for TATA STEEL and quarterly results for TATA STEEL)

Read: Latest Annual Report Analysis of TATA STEEL