Tata Steel Eyes Earnings Boost in FY22, Driven by Europe Segment

SEATTLE (Scrap Monster): Analysts and investors expect Tata Steel earnings to witness improvement in FY22. The positive outlook is mainly driven by recent improvement in profitability from the European operations, coupled with improved realizations in the domestic market.

According to JP Morgan Private Limited, the EBITDA of Tata Steel Europe (TSE) operations are likely to cross $100 per tonne in H1FY22. It must be noted that the EBITDA had surged higher to hit $66 per tonne in Q4 FY21. The robust demand has kept the European steel prices well above the historical averages. TSE expects improved earnings in the event of extension to safeguard measures. Incidentally, the company plans separation of the UK and Netherlands businesses, in order to achieve enhanced accountability. On the other hand, the strict carbon emission standards may pose challenge to the company.

Tata Steel’s standalone EBITDA per tonne skyrocketed by 39% over the sequential quarter during the March quarter. The profitability of Indian operations was further boosted by recent hikes in steel prices. JP Morgan believes that the company is likely to report lowest net debt levels in nine years during FY22. The integrated steelmaker is an ideal candidate for a re-rating, it added.

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