TATA steel Ltd is one of the biggest companies in its field and it now has the backing of its stats as well. IN the last quarter Tata Steel Ltd.’s consolidated Ebitda rose by a remarkable 91.4% which is 3.2 times more than that of the previous year. The market, however, poses a risk which should not be taken lightly.
The performance is what has led to massive increase in the profit but the increase in steel prices is also a very important and decisive factor in their profit. The steel prices rose by 8% which led to the increase in the profit of the company. The margins were boosted by the increase in the prices of steel which nullified the 35% increase in the prices of the raw materials that the market faced this year.
One important thing to note here is that this profit was not just seen in India, even European countries did well and performed better. The company showed a loss of Rs1,168 crore which was mostly due to the charges related to British Steel Pension closing and other additional investments. If all that is excluded the company’s profit stands at a very impressive Rs3,352 crore way more than the profit for December quarter which stood at a mere Rs301 crore.
The investors need to keep an eye on the market as consumption of steel in India is coming to an end as it saw an increase of just 3.4% in April. The decline of steel usage in India means that companies like Tata Steel need to be reliant on export markets. This has also been dampened by the fall of Rupee in the exchange market. This now means that the steel companies would get less money for 1 dollars in the export market.
The Indian government, on the other hand, isn’t capable of supporting the international prices and it could be a very big risk to investors. While the profit of Tata Steel may still rise this next quarter, however, fall in the steel prices could knock it backwards and this could be a subject of great risk to the investors.
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