Expect non ferrous metals to do better in Q4: Emkay
Emkay Global Financial Services has come with its March quarterly earning estimates for Metals and Mining sector. According to the research firm, non ferrous metals are expected to do better than ferrous metals, as steel prices broadly are likely to remain under pressure on weak domestic demand.
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Expect non ferrous metals to do better in Q4: Emkay
Emkay Global Financial Services has come with its March quarterly earning estimates for Metals and Mining sector. According to the research firm, non ferrous metals are expected to do better than ferrous metals, as steel prices broadly are likely to remain under pressure on weak domestic demand.
Like this story, share it with millions of investors on M3
Expect non ferrous metals to do better in Q4: Emkay
Emkay Global Financial Services has come with its March quarterly earning estimates for Metals and Mining sector. According to the research firm, non ferrous metals are expected to do better than ferrous metals, as steel prices broadly are likely to remain under pressure on weak domestic demand.
Emkay Global Financial Services has come with its March quarterly earning estimates for Metals and Mining sector. According to the research firm, non ferrous metals are expected to do better than ferrous metals, as steel prices broadly are likely to remain under pressure on weak domestic demand.
Q4FY12 brought some cheer to the metals industry on account of improvement in prices with some respite in terms of costs over the previous quarter. However, this can be attributed to seasonality. No respite came from the regulatory issues during the quarter despite wide expectations. Freight rates however were hiked and coal India’s new pricing policy added to the uncertainty. FY13 budget meanwhile remained largely neutral for the industry.
Revenue for our Metals and Mining universe is likely to remain flat both on YoY and QoQ basis. Sales volume has risen on YoY basis on capacity expansion while realizations have risen on QoQ. Bhushan Steel in our universe is expected to show best topline growth (15%) on QoQ basis followed by HEG (5%) and GPIL (4%) mainly due to higher volume. Sesa Goa on the other hand is likely to remain a laggard with a 12% fall in topline on QoQ on lower volume.
EBITDA performance is likely to be better for Q4 on QoQ, as cost of some raw materials softened to some extent. Some strength in INR also helped most of the companies in this regard. We expect our coverage universe to show an EBITDA growth of 14% on QoQ mainly driven by Tata Steel (up 59% QoQ), HZL (10% QoQ), HEG (16% QoQ) and GPIL (16% QoQ). Sesa Goa is likely to see a fall in EBITDA by 10% QoQ.
Backed by improvement in EBITDA on QoQ basis, the bottomline of our coverage universe is likely to show an improvement by 36% QoQ. Sharper growth in bottomline is also due to Sesa Goa (up 39% QoQ), which includes attributable profit from Cairn India, strong expected recovery in GPIL (up 59% QoQ) and Sterlite Ind (up 27% QoQ) on better performance expected in VAL. JSW Steel and on the other hand is likely to post a de-growth in APAT (by 26% and 19% respectively on QoQ).
Several regulatory issues have been surrounding the metals and mining space recently and we expect future performance would depend broadly on this. On operational basis, going forward we expect non ferrous metals to do better than ferrous metals, as steel prices broadly are likely to remain under pressure on weak domestic demand.
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