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How Tata Steel’s market cap grew 256 percent in one year



As the COVID-19 virus spread and lockdowns were announced, Tata Steel Europe’s sales fell. The CEO of Tata Steel Europe expressed concern about what might happen if it happened in India.

Tata Steel’s highly leveraged balance sheet may be sunk by a similar period of no sales in India. As a result, the Tata Steel crew started to work. Koushik Chatterjee, the company’s financial manager, established a “virtual cash war room.” Every business decision was meticulously examined. While Chatterjee had to raise funds (gross debt increased from Rs. 104,000 crore to Rs. 118,000 crore in the first quarter of FY21), the strategy worked. As revenues improved in June 2020, the firm generated Rs. 1,000 crore in free cash flow during the lockdown-plagued quarter.

Tata Steel’s fortunes are as much reliant on Chinese events as they are on the rapidly consolidated Indian steel market. Tata Steel’s turnaround in the last year was mostly due to rising steel prices, but the business has also adopted various efforts that should help it go the extra mile.

The market capitalization of Tata Steel has increased by 256 percent to Rs. 141,000 crore. Over the last decade, the average return on equity has increased from 4% to 11% in the fiscal year ended March 2021. The company has a spring in its step after over a decade, and its next phase of growth should be accompanied by a lot more financial discipline.

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