Tata Steel Key Ratios

The PAT margin significantly peaked in FY2022, driving the high ROE of 44.72%, though it deteriorated in subsequent years due to a dip in profitability, ultimately leading to a negative margin in FY2024.Asset turnover showed an upward trend in FY2022 but slightly declined afterward, indicating challenges in efficiently utilizing assets to generate sales; a consistent decline can affect future profitability.Leverage ratios decreased in FY2022, indicating reduced dependency on debt which positively influenced ROE, but the increase in FY2024 may heighten financial risk as the company reports negative equity.

Inventory days initially improved in FY2022, reflecting better inventory management, but have since increased, which may signify inefficiencies that require scrutiny.Receivable days consistently declined year-on-year, indicating stronger collection efforts and improved cash flow management, contributing positively to operational efficiency.The cash conversion cycle remains negative, demonstrating effective working capital positioning; however, increasing inventory days could eventually hurt this advantage if not addressed.

ROE fluctuated significantly, peaking in FY2022 due to enhanced PAT margin but turned negative in FY2024, reflecting overall operational challenges and declining net profits.ROCE followed a similar trajectory, indicating performance issues as capital efficiency decreased; capital is not being utilized effectively under current conditions, leading to lower returns.ROA also showed a downtrend, mirroring ROE and ROCE, indicating a pervasive issue with asset utilization, leaving investors cautious about future returns.