Daily Brief Energy/Materials: Tata Steel Ltd, Texas Pacific Land , Hawkins Inc and more

Tata Steel has released its Q2/23-24 results. Consolidated production and sales volume declined 3% and 2% y-o-y, respectively, to 7.31 mn tons and 7.07 mn tons, respectively. Consolidated revenue fell 7% to INR 55,682 cr, driven by lower volume and prices. EBITDA was INR 4,315 cr, with a margin of 8%. EBITDA margin/ton was INR 6,106. The Indian business continued to perform well, but the European business continued to weigh on the overall performance.

While the results were decent, the Indian business’ good performance was offset by increasing losses in the UK operations. The financial risk profile is deteriorating. Positively, liquidity is solid, with a large cash position. Key near-term credit drivers would be the restructuring of the UK business and a GBP 1.25 bn green steel manufacturing project in the UK.

• TPL Summary Texas Pacific Land (TPL) reported third quarter results where a decline in daily production led to lower than expected oil and gas royalties.
• The rate of production has always been the variable part of TPL’s results. In Q3 production levels were impacted by the summer heat in Texas causing abnormal electricity levels
• TPL reported third quarter revenue of $158.0 million compared to our estimate of $178.7 million

• HWKN reported fiscal second quarter (September) results with improved gross margin and continued reversal of last in first out (“LIFO”) reversals
• HWKN converted inventory to cash that was then used to reduce the debt balance allowing HWKN to acquire two more water treatment businesses
• The quarter included a sharper decline in industrial sales than expected. However, the higher gross margin in water treatment and health and nutrition segments were able to offset the impact