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Investors on Dalal Street gave thumbs down to Tata Steel’s second-quarter result.
The firm on Wednesday reported a 5.90 per cent year-on-year (YoY) rise in net profit despite a fall in top line.
The profit figure stood at Rs 3302.31 crore in Q2FY20.
One-time huge tax gain of Rs 4,233 crore mainly aided the net profit of the company in the September quarter.
On a consolidated basis, the company reported a loss before tax of Rs 7 crore in September quarter against a profit before tax of Rs 5,411.10 crore in the same period last year.
Consolidated income dipped 15.7 per cent to Rs 34,762.73 crore in during the quarter under review against Rs 41,257.66 crore last year a due to the lower realisation from sales, impacted by falling prices on one hand and demand on the other.
The scrip was trading over 3 per cent down at Rs 391.80 in the early trade, while the benchmark BSE Sensex was trading 95 points, or 0.23 per cent, up at 40,581.
Global brokerage firm Goldman Sachs maintained ‘Buy’ on Tata Steel with a target price of Rs 443.
It added that standalone numbers were in line but losses in other businesses drive a miss.
According to ET, analysts believe that steel prices have stabilised, and the benefit of lower raw material prices will start showing from the current quarter, especially for the European business.
However, the long-term concerns remain – on how the company will pare down its mounting debt amid weakening global demand and falling earnings.
Net debt increased by almost 4 per cent to Rs 1.07 lakh crore.
The company paid an interest of Rs 1,871 crore and adjusted EBIT was Rs 1,891 crore.
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