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Tata Steel down as Corus extends production cut
Tata Steel stock slid around one per cent on Tuesday though the company announced that September quarter results of Corus would be consolidated and taken on record on November 28.
According to analysts, though this would reduce costs to an extent, it would also be read as negative income guidance before the September quarter results.
Broking houses have already trimmed Tata Steel EPS estimates for the current financial year to March 31, 2008.
Motilal Oswal believed average blended realisation for steel in the domestic market would decline Rs 6,000 a tonne QoQ in 3QFY09 and further by Rs 4,000 a tonne in 4QFY09. It felt steel prices should stabilise between January and March 2009. However, margins would be squeezed in 3QFY09 and 4QFY09.
However, Mr Arun Kejriwal of KRIS felt that Tata Steel prices were hammered so much that the estimated FY09 price-earning ratio has come down below one. September quarter results of Corus may now throw up positive surprise, rather than a negative one.
