Amid weak operating margin in the second quarter of the financial year of 2021-22, Tata Metaliks - a subsidiary of Tata Steel - shares slumped 7 per cent to Rs 1,057 per share on the BSE intraday trade on Tuesday. It reported a disappointing margin due to higher raw material costs.

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In Q2FY22, the company’s profit after tax slipped by 33 per cent to Rs 54.62 crore as compared to Rs 82 crore; while revenue from operation jumped 24 per cent to Rs 644.84 crore year-on-year basis.

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Similarly, EBITDA (earnings before interest, taxes, depreciation, and amortization) margin declined both quarter-on-quarter (QoQ) as well as YoY, at 15.5 per cent, down by 998 basis points (bps) QoQ and 559 bps YoY.

The company in its FY21 report had said, “Pig Iron is vulnerable to market volatilities of raw material prices and steel prices. Therefore, the company works on these risks and mitigates them to the extent possible by optimizing the raw material procurement cost, controlling the blast furnace operational parameters and differentiating its products through customization, technical services, and other brand promises.”

Due to the impact of the Covid-19, the DI pipe demand has been growing at a double-digit rate over the last 5-6 years, excluding FY20-21, the company had said. It added that the growth in demand is expected to be even higher with the government’s priority and renewed thrust on the water going forward. 

Hence, the long-term risks of DI Pipe demand going down is quite low. However, liquidity issues could be a matter of concern in some states, Tata Metaliks had said in a yearly update.

A Tata Group company is engaged in the manufacture and sale of pig iron and ductile iron pipes. It has its manufacturing plant at Kharagpur in the state of West Bengal.

At around 01:33 pm, the stock was trading over 6 per cent lower at Rs 1,1066 per share on the BSE, as against a 0.19 per cent decline in the S&P BSE Sensex.