Tata Steel on Wednesday reported consolidated net profit of Rs 917 crore in the second quarter, against net loss of Rs 364 crore a year ago, on the back of improved share in the domestic market coupled with better pricing and rising volume in its largest market, Europe.
Total income from operations rose to Rs 36,645 crore, up around 7.4 % against Rs 34,132.73 crore clocked in the same quarter last fiscal.
"The sound rise in profit is attributed to improved volume in both domestic and European operations. Also, better margins from domestic operations supplemented the numbers," group executive director for finance and corporate Koushik Chatterjee told reporters here late this evening.
Brokerage ICICIdirect said Tata Steel reported a good set of Q2FY14 (consolidated) numbers, with a "significant surprise" on the steel sales volume front, especially from its European division.
The steel firm witnessed 3 % rise in group operational profit (EBIDTA) despite margin pressure in Europe, Chatterjee added.
In the domestic operations, deliveries increased marginally to 2.04 million tonne (MT) from 2 MT. However, the EBIDTA margin jumped 32 % from 29 %.
"Overall market conditions weakened during the quarter... however, we were able to increase deliveries by 18 % over last year and increase market share," Tata Steel India and Southeast Asia managing director TV Narendran said.
The newly-appointed head of domestic operations also said the demand environment is likely to be better in the second half of the ongoing fiscal.
The company said the recent price hikes of Rs 1,500-2,000 (announced in Sept-October) also supplemented the margin.
The company also reported improved performance in its Thailand operations, Narendran added.
On the Europe operations, which was earlier a drag on the balance sheet of the company due to weak economic conditions, the company said demand situation is likely to improve moderately.
Second quarter deliveries increased by 10 % to 3.46 million tonne from European operations.
"The improvement in production continued in the second quarter...despite a margin squeeze during this period," Tata Steel Europe managing director and chief executive Karl-Ulrich Kohler said.
Giving an update on greenfield projects, Chatterjee said the work is on in full swing in its upcoming project at Kalinganagar in Odisha, the first phase of which will be operational in the second half of the next fiscal.
At end of September, Tata Steel had a net debt of Rs 64,334 crore.
"We are very conservative in taking fresh debt," Chatterjee said, adding the company has repaid around Rs 14,000 crore of debt in first half of fiscal.
Shares of Tata Steel closed nearly 2 % higher at Rs 358.85 a piece.