“Axis Securities sees the Tata Goup company’s operating margin at 10.6 percent as compared to 26.1 percent in the corresponding period last year and 10.1 percent in the previous quarter”.
Representative image.
Tata Steel is expected to report a 12.6 percent dent in profit sequentially and 13.9 percent annually at Rs 52,352 crore in the quarter ended December 2022,
Axis Securities is of the view that the fall in revenues will be led by lower HRC prices in India and Europe QoQ and YoY. It sees margins improving sequentially dragged by lower coking coal costs at Indian operations, partially offset by higher energy costs in Europe.
Kotak Institutional Equities has estimated steel realisation to decline by 2.2 percent QoQ and 11.9 percent YoY owing to price cuts and contract resets during the reporting quarter. It expects standalone volumes to increase by 9.8 percent YoY but fall 2 percent QoQ to 4.67 million tons on a low base.
Axis Securities sees the Tata Goup company’s operating margin at 10.6 percent as compared to 26.1 percent in the corresponding period last year and 10.1 percent in the previous quarter.
India EBITDA per tonne would recover by 54 percent QoQ to Rs 12,495 per tonne, down 56 percent YoY, led by lower coal costs, partly offset by lower realisations.
EBITDA (Earnings Before Interest Tax Depreciation And Amortisation) at Indian operations are likely to increase QoQ due to lower coking coal costs which will be partially offset by lower EBITDA at Europe led by higher energy costs, Axis Securities added.
The company’s net profit could tank by 88 percent YoY and 24.3 percent QoQ to Rs 1,146 crore in the quarter under review, as per the poll.
Kotak Institutional Equities estimates Europe to report an EBITDA loss of $63 per tonne led by significant drop in prices and weak demand resulting in adverse product mix, partly offset by lower costs.
Indian steel prices witnessed a marginal fall in December. The key event during December was imposition of anti-dumping duty on seamless tubes and pipe imports from China for five years.
“The immediate near-term looks weak for steel companies,” said IDBI Capital Markets & Securities.
Chinese HRC has fallen by 23 percent while domestic prices have fallen only 15 percent in the past one year. While in December, Indian steel prices fell by 3 percent MoM as global sentiment remained sluggish but Chinese steel prices rose 6 percent.
IDBI Capital Markets & Securities believes that there are chances of recessionary environment in developed countries in the coming one year. Even Chinese economy has weakened due to imposition of lock downs in various parts of the country lately, it added.
