Tata Steel has emerged as the most profitable company after Reliance Industries and ONGC in FY22, with over a five-fold jump in earnings. The company has left the group’s cash cow, Tata Consultancy Services (TCS), and HDFC Bank behind in profitability, Financial Express reported.
Reliance Industries has been retaining its numero uno position since FY16, the next three ranks have been reshuffled between TCS, HDFC Bank, SBI, ONGC and IOC over the last many years, Capitaline data show.
Tata Steel reported a record net profit of ₹40,154 crore in FY22, aided by elevated steel prices and strong performance across geographies. The revenue for the year stood at ₹2.42 trillion, registering a growth of 55.9 per cent. While ONGC, the second most-profitable company, occupied the same spot in FY17 and was the most profitable firm in FY14, Tata Steel has never been among the top five over the last 10 years.
The net profit of Tata Steel surged at a compounded rate of 57.8% between FY19 and FY22, while revenues rose 16.1% during the last three years. In comparison, TCS saw its net profit and revenues grow by 6.8% and 9.4%, respectively, during the same period.
In India, the company achieved its highest-ever annual crude steel production of 19.06 million tons, a 13 per cent increase. The company topped deliveries of 18.2 million tonnes during the fiscal year.
Revenue from European operations increased 54% to £8,876 million, with an operational profit of £1,199 million, resulting in EBITDA per tonne of £133.
Tata Steel has managed to put up a consistent performance across quarters during the financial year, taking its full-year EBITDA to ₹63,830 crore. This, in turn, has led to a record margin of 26%. That compares with average margins of 13% clocked over the last 10 years through FY21.
The free cash flow of Tata Steel for the year stood at ₹27,185 crore and the board declared a record dividend of ₹51 per share, up from last year’s ₹25.
Shares of Tata Steel had a dream run on the bourses over the last two years. The shares have surged over twofold since January 2020 – Sensex gained 35.6% during the same period.
“We increase our FY23 EPS estimate by 24% and roll forward our valuation to FY24 which we now assume to be a normalised year,” Jp Morgan wrote in a note dated May 4.