Tata Steel plans capex of Rs 16,000 crore for FY24

TATA Steel has announced a consolidated Capital Expenditure (Capex) of Rs 16,000 Crore for both domestic and global operations for FY24. It has allocated Rs 10,000 Crore for its standalone operations and Rs 2,000 Crore for its subsidiaries in India, as part of its planned expenditure. The Capex of Rs 16,000 Crore is going to be financed through internal accruals over the full year as stated in the annual report of FY23.

A significant portion of the allocated amount of Rs 10,000 Crore, has been designated for Tata Steel’s standalone operations. Approximately 70% of this allocation will be directed towards the Kalinga Nagar project. The company is currently engaged in expanding the capacity of its plant located in Kalinga Nagar, Odisha, aiming to increase it from 3 MT to 8 MT.

As per the company, the other Indian subsidiaries, currently in an expansion phase with value accretive projects, especially in downstream operations which are important to service customer needs and improve our value-added product mix, will have a capex of about Rs 2,000 Crore.

In Europe, Tata Steel Nederland will incur a capex of Rs 1,100 Crore on the relining of its blast furnace, which is underway. The remainder of the capex is largely allocated towards and will be spent on sustenance, environmental initiatives, and improvement projects.

Also, Tata Steel has been actively involved in comprehensive discussions with the UK government concerning the future of its operations in the country.

Tata Steel has planned a capital expenditure of Rs 12,000 Crore for its operations in India and Europe during the financial year 2023. Out of this, Rs 8,500 Crore has been allocated for India, while Rs 3,500 Crore has been designated for operations in Europe as per the management. Furthermore, during FY22 on a consolidated basis, the company has spent Rs 10,522 Crore on a capital Project across India and Europe primarily towards ongoing growth projects in India, essential sustenance, and replacement schemes.

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In terms of the financial performance for FY23, the company’s revenue was Rs 2,43,353 Crore. The operating profit amounted to Rs 32,300 Crore, resulting in an operating profit margin of 13%. The net profit for FY23 stood at Rs 8,075 Crore. The ROCE and ROE were recorded at 12.8% and 7.28%, respectively, while the Return on Assets was at 2.79%. The company is having a debt of Rs 84,893 Crore on its balance sheet, with a debt-to-equity ratio of 0.82 times.

On June 19, 2023, the stock opened flat at Rs 114.25, the same as its previous day’s closing price on the BSE. During the intraday session, the stock reached a high of Rs 115.25 and a low of Rs 114.15. The 52-week range for the stock is Rs 124.30 as the high and Rs 82.71 as the low. Currently, the stock is trading at Rs 114 approximately 8% below its 52-week high. The company’s total market capitalization stands at Rs 139,612 Crore.

Promoters holding in the company stands at 33.90%. FIIs have reduced their stake from 21.87% to 20.62% while DIIs have increased their stake from 19.62% to 20.68% as per the latest quarterly update.