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Tata Metaliks shares recover from earnings jolt but all is not well yet. Here's why

market | Apr 26, 2022 10:49 AM IST

Tata Metaliks shares recover from earnings jolt but all is not well yet. Here's why

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Tata Metaliks shares recovered on Tuesday, after falling over 7 percent on Monday, as the company reported a weak set of numbers for the fourth quarter of financial year 2022.

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Shares of Tata Metaliks, a subsidiary of Tata Steel, manufacturing pig iron and Ductile Iron (DI) pipes, recovered on Tuesday, after falling over 7 percent on Monday as the company reported a 30 percent year-on-year fall in its net profit for the fourth quarter of the financial year 2022.
The stock was trading over a percent higher at Rs 818 in early trade on Tuesday. On Monday, the stock had touched an intraday low of Rs 802.3.
Tata Metaliks has fallen over 8 percent in the last one year and over 2 percent in 2022 so far.
The company's earnings for the fourth quarter were hit by a rise in raw material prices and fixed-priced contracts for DI pipes. DI pipes are used in transportation of potable water from rivers, lakes, reservoirs, etc.
The company's profit fell 30 percent to Rs 52.46 crore for the quarter ended March against the Rs 74.99 crore net profit reported during the same period last year.
However, it reported a rise in total income to Rs 814.65 crore compared to Rs 663.64 crore in the year-ago period.
Its total expenses, given the increase in raw material prices, stood at a high of Rs 772.29 crore as against Rs 539.71 crore a year ago.
The pig iron prices have moved up significantly, about 15 percent, during February-April, said Sandeep Kumar, Managing Director of Tata Metaliks, adding that they are expected to remain elevated going ahead as well.
Pig iron or crude iron is an intermediate product of the iron industry in steel production.
"The pig iron prices in particular, are likely to remain pretty strong, primarily because of the Ukraine-Russia conflict because there is no material moving in from there," said Kumar in an interview with CNBC-TV18.
Talking about the sharp rise in coal and coke prices, he said, "If you look at coke only, there was a jump of almost 30 percent, compared to Q3... Coking coal was at $100, about a year back, maybe in Q4FY21 and in March (this year), it touched a high of $670. So it's more than six times. Absolutely extraordinary, unprecedented."
Kumar, however, added there may be better days ahead for the company. He expects improvement in DI pipes business "as we get the benefit from higher prices in FY23".
According to Kumar, the company will start production of Phase-1 of DI pipe expansion next month.
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