Tata Steel (TSL) has reported consolidated EBITDA in Q4-FY20 at ₹4,650 crore (down 38 per cent YoY but up 28 per cent QoQ), which was 63 per cent above our estimates of ₹2,850 crore, mainly on back of improvement in European operations. Better than expected realisations in the Indian business and turnaround in European operations led to the significant beat.

Product mix changes led to better-than-expected realisations in the Indian business, which was partly offset by lower volumes.

TSL has delayed the capex for KPO (Phase II) and is currently focussing on cost-saving measures and has reduced capex to ₹5,000 crore for FY21. The company will only focus on critical cost-saving capex such as pellet plant and CRM mill, which is likely to commission in the second half of FY21 and should drive cost savings of $10/t in FY22. We expect KPO (Phase II) to commission by end-FY23 vs earlier estimates of end-FY22.