Tata Steel Ltd is likely to deliver a strong set of numbers on Tuesday, when it comes out with its March quarter earnings, according to experts.
The company is likely to report a consolidated revenue of Rs 68,737 crore in March quarter, up 38 percent from a year ago, led by strong improvement in realisations in both India as well as in Europe. Consolidated net profit may surge 44 percent on-year to Rs 9,580 crore. Sequentially, both revenue and profit are likely to be flat.
However, consolidated margins are likely to contract sharply mainly due to higher iron ore prices, while domestic margins are likely to fall amid higher coking coal prices. EBITDA margins may fall to 22.5 percent in the quarter from 28.4 percent a year ago and 26.1 percent last quarter.
Analysts are likely to keep an eye on the management commentary on profitability and cash flow from European operations, and update on growth capex.
Let’s check out what analysts are expecting from Tata Steel’s Earnings.
Tata Steel’s standalone volume is expected to grow sharply by 17 percent quarter on quarter (QoQ) to 5 million tonnes. Realisations are expected to fall by 2.5 percent or Rs 1,900 per tonne QoQ to Rs 73,380 per tonne. Due to a fall in realisations and higher costs, domestic EBITDA/t would fall by 8 percent/Rs 2,300 QoQ to Rs 26,360.
Tata Steel Europe (TSE) operations is expected to report EBITDA/t of $200, up 10 percent on-quarter due to volume expansion and improvement in spreads. Owing to strong performance in TSE partially offset by fall in margins in domestic operations, Prabhudas Lilladher expects consolidated EBITDA to grow by 8.6 percent QoQ to Rs 17,300 crore.
Kotak Institutional Equities
The brokerage estimates steel realisation to decline 2 percent on-quarter (up 56 percent YoY) impacted by back ended price hikes in Q4FY22. It expects volumes to increase 6 percent YoY (+12 percent QoQ) at 4.9 million tonnes (MT) on higher exports and improved domestic demand. India EBITDA/tonne to decline 11 percent QoQ to Rs 24,561 a tonne (+25 percent YoY) impacted by higher coking coal costs.
The brokerage firm estimates Europe EBITDA/tonne at $206 per tonne (+12 percent QoQ,+214 percent YoY) to benefit from higher prices in the region and lower costs on a consumption basis.
Revenues to grow due to higher steel prices and steel deliveries. Tata steel has released provisional production and deliveries. Group Steel deliveries are higher at 13 percent QoQ and 4 percent YoY.
EBITDA is expected to marginally increase as the impact of higher raw material costs (coking coal) is offset by higher steel prices and margin pressure due to higher coking coal prices. PAT and EPS to broadly follow the EBITDA growth.
Tata Steel‘s topline is expected to grow 23 percent YoY in Q4FY22 led by strong improvement in realisations in both India as well as in Europe.
However, its consolidated EBITDA is likely to decrease by 1.9 percent YoY mainly due to fall in spreads at its European steel business.
Tata Steel domestic EBITDA to be impacted by higher coking coal prices for domestic operations. Shipments up owing to blended realisation expected to be flat QoQ. Profitability expected to be impacted by higher coking coal prices.
Tata Steel Europe EBITDA to be impacted by higher iron ore price as well.
On Monday, Tata Steel closed at Rs 1295.10 on the BSE, up 1.84 percent from its previous close, while the benchmark Sensex fell 0.15 percent to 56,976 points.
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