Posted on 29 May 2024
Tata Group’s top steel company Tata Steel Ltd might see a drop in yearly net profit and revenue for the March quarter. According to nine analysts polled by Moneycontrol, net profit for Q4 will be at Rs 874 crore compared to Rs 1,693.30 crore the same period last year, with revenue possibly falling 7 percent Year on Year to Rs 58,489.60 crore.
Sequentially, revenue could grow by 5.7 percent, and net profit might rise by 3.2 percent in Q4. The firm will report its earnings on May 29.
However, EBITDA is likely to decline both YoY and Quarter on Quarter, with an expected figure of Rs 6,174.40 crore, down 15 percent YoY and 1.5 percent QoQ, attributed to lower steel prices and higher coking coal costs.
Axis Securities predicts a 15 percent and 9 percent QoQ and YoY, respectively, in Tata Steel India’s EBITDA per tonne, driven by reduced realisations and increased coking coal costs, partly balanced by operating leverage. In Europe, the company’s EBITDA per tonne loss is expected to decrease to $ 112/t in the fourth quarter of FY24 from $178/t in the third quarter, due to higher sales volume and improved realisations in the UK.
Kotak expects Tata Steel Europe to report an EBITDA loss of $104/tonne versus loss of $178/tonne in the third quarter of FY24 led by improved realisations and operating leverage on a sequential basis.
Tata Steel’s India sales volume increased by 0.53 MT QoQ in a robust seasonal quarter. In Europe, sales volume rose by 0.15 MT QoQ, driven by the restarting of Blast Furnace 6 in the Netherlands and improved sales in the UK compared to the weak third quarter of FY24.
Overall, consolidated sales volume grew by 0.75 MT QoQ. Meanwhile, Steel HRC prices (traders’ market ex-Mumbai) declined by 7 percent year-on-year (YoY) and 5 percent QoQ. Despite this, consolidated revenue is anticipated to increase by 7 percent QoQ, mainly due to higher consolidated sales volume.
Yes Securities highlighted Tata Steel as a focal point in the upcoming earnings season, particularly regarding updates on its UK steel operations closure. They anticipate Tata Steel India facing cost pressures from coking coal inflation and lower steel prices, leading to margin contraction. Conversely, they expect European operations to improve, with losses reducing to $145/tonne due to increased European HRC prices and the restart of the Netherlands blast furnace.
Source:Money Control
