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Jul 12, 2012, 03.18 PM IST
Steel companies are likely to report a muted performance for the June quarter due to lower volumes on account of demand worsening during the quarter.
Steel companies are likely to report a muted performance for the June quarter due to lower volumes on account of demand worsening during the quarter. The even more worrying factor was the sector's inability to reap benefits from the decline in coking coal prices due to the weak rupee which depreciated around 10% against the dollar.
With these factors at play, analysts expect only a slight improvement in margins quarter-on-quarter and also expect net profit of companies to remain under pressure
Have a look at what brokerages are saying about ferrous metal companies like JSW Steel , Tata Steel and Steel Authority of India
SAIL : We expect revenue to increase by around 3% YoY on the back of flat sales volumes of around 2.8 MT but marginally better realizations. PAT is expected to drop by nearly 6% YoY on account of higher interest and depreciation costs and lower other income. The brokerage has assigned a 'sell' rating on the stock with a target price of Rs 88.
Tata Steel: We expect consolidated revenue to drop by ~4.6% YoY. We expect 1.6 MT of sales volume in India and 3.2 MT in Europe, both lower QoQ and flat YoY. Consolidated PAT is expected to be Rs 5441million, subdued on account of higher interest costs and significant YoY drop in margins. The brokerage has assigned a 'sell' rating on the stock with a target price of RS 393
Angel Broking expects margin pressures to continue in 1QFY2013, with companies expected to witness a decline in operating and net profit margins, respectively, in 1QFY2013 on account of generalized inflation, overall slowdown and unfavorable financial leverage. Here is what the brokerage believes results of metal companies to be like
JSW Steel: revenues would be up 33% to Rs 9436, YoY, Net profit is likely to rise 11.11% to Rs 642 crore.
SAIL: Revenues are likely to be around Rs 13249 crore, up 22.6%. Net profit is estimated at Rs 7077 crore, up 28.4%.
Tata Steel: Revenues are likely to dip around 2% to Rs 32,397 crore. Profits may also decline 32.5% to Rs 985 crore.
Tags: coking coal prices, lower volumes , Steel companies, JSW Steel, Tata Steel and Steel Authority of India Centrum Broking, higher interest costs
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