Tata Sponge Q1 results drop; stock price not affected

Tata Steel promoted Tata Sponge Iron Ltd., has witnessed a de-growth in its Q1FY17 results with the drop in top line, both on QoQ and YoY basis. However, the stock opened with a gap-up of 2 per cent amid expectations from the results.

Anyway the stock has been trading with higher tops and higher bottoms since March 2016. In June 2016 Tata Sponge also has received letter of intent i.e. a bid from Coal India’s subsidiary Eastern Coalfields Limited to provide 24000 tonnes coal yearly to the company.

Company’s quarter on quarter consolidated revenues have dropped 15.4 per cent to Rs 118.73 crores in Q1FY17 as against Rs 140.37 crores in the previous quarter. During the quarter company saw a decrease in inventory to Rs 9.66 crores.

Company’s EBITDA has dropped by 44.6 per cent to Rs 8.15 crores from Rs 14.72 crores for Q4FY16. Thereby net profits too have dropped, but comparatively lesser than EBITDA amid fall in interest and tax payments. Net profits stand at Rs 10.55 crores as against Rs 12.81 crores, with a decrease of 17.6 per cent.

On a year on year basis the revenues of the company have recorded a drop of 32.2 per cent from Rs 207.18 crores in the corresponding quarter of the previous year. Net profits too have witnessed a decline of 22.4 per cent from Rs 10.72 crores in Q1FY16.