July 30 (Reuters) – Tata Steel, India’s second-largest steelmaker by market capitalisation, reported a better-than-expected first-quarter profit on Thursday, as firm domestic steel prices and steady India volumes outweighed pressure from higher coking coal costs.
The Tata Group company’s consolidated net profit rose 11.6% from a year earlier to 23.18 billion rupees ($242.3 million) in the quarter ended June 30.
Analysts, on average, had expected a net profit of 22.95 billion rupees, according to data compiled by LSEG.
Prices of domestic flat steel products, such as hot-rolled coil and cold-rolled coil, rose sharply both sequentially and year-on-year on a weaker rupee and higher Chinese export offers, analysts at Elara Capital said.
Additionally, Tata Steel’s domestic crude steel production rose over 10% from a year earlier to 5.76 million tonnes, driven by higher output at its Jamshedpur and Kalinganagar facilities, while deliveries rose nearly 9% to 5.17 million tonnes.
The company’s first-quarter consolidated total revenue from operations rose 14.3% from a year earlier to 607.94 billion rupees, beating analysts’ expectations of 586.65 billion rupees.
However, weaker production volumes outside India and elevated raw materials costs, such as for iron ore and coking coal, dented some of the gains.
Coking coal prices — a key input cost for steelmakers — remained elevated, pushing material expenses higher by 12%. Total expenses during the quarter rose 13.1% from a year earlier to 569.40 billion rupees.
Meanwhile, Tata Steel’s quarterly production volumes in the Netherlands dropped 8.8% from a year earlier, while Thailand production remained flat. Delivery volumes in the Netherlands, UK and Thailand dropped 6.7%, 20% and 3%, respectively.
The company also approved a 4.8 million-tonnes-per-annum steelmaking capacity expansion at subsidiary Neelachal Ispat Nigam — at an estimated capex of 338.73 billion rupees — to expand its long products portfolio.
Earlier in July, JSW Steel reported a quarterly profit beat on firmer steel prices and steady volumes.
($1 = 95.6800 Indian rupees)
(Reporting by Anuran Sadhu in Bengaluru; Editing by Janane Venkatraman)
