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Tata Steel may report up to 95 per cent year-on-year (y-o-y) drop in June quarter profit on the back of 6-11 per cent fall in sales.
The depressing demand a high cost in Europe will be partially offset by improved sequential realisations.
Kotak Institutional Equities pegs Tata Steel’s June quarter adjusted profit at ₹350 crore compared with ₹7,105 crore in the year-ago quarter.
It sees June quarter sales at ₹59,400 crore against ₹63,430 crore, down 6.4 per cent y-o-y.
“We expect steel realisations to fall 16 per cent YoY despite better product mix and auto contract revisions. We expect standalone volumes to increase 18 per cent YoY, but fall 8.3 per cent QoQ to 4.56 million tonnes. India EBITDA per tonne will decline 36 per cent y-on-y to ₹13,599 per tonne led by higher input costs,” it said.
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Elara Securities expects Tata Steel to report recurring profit at ₹437 crore. It sees sales to drop 11 per cent YoY to ₹56,637 crore. Motilal Oswal pegs the company’s profit at ₹970 crore. It sees sales at ₹59,145 crore. Steel prices have corrected almost 10-15 per cent since February and have neared bottom and a majority of the downside has been priced with no major price correction expected in the near term, it said.
Tata Steel reported a 2 per cent year-on-year increase in crude steel production at 5.01 million tonnes in June quarter while it saw a decline in production in its Europe division due to planned shutdowns.
Along with this, the company took price cuts due to which StoxBox expects Tata Steel to report a high single-digit decline in its revenue on a sequential basis. Additionally, high coking coal costs and lower realisations (price cut effect) would outweigh the benefits of an improved product mix, leading to a direct impact on the company’s margin profile this quarter.
The stock of Tata Steel trades at ₹115.35, down by 1.07% on the NSE at 10:11 am on Monday.
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