Shares of Tata Metaliks, a producer of pig iron and ductile iron (DI) pipes, slumped nearly 5 percent in the morning session on July 14, a day after the company reported a dramatic fall in profits in the June quarter.
Tata Metaliks' net profit crashed 98.71 percent to Rs 1.22 crore from Rs 94.90 crore in the same quarter last year, the Tata Group company said. The company’s total revenue increased 10.37 percent to Rs 669.35 crore, driven by an increase in realisation of both pig iron and DI pipes by 36-40 percent.
The firm added that sales volume of pig iron and DI pipes were lower by 23 percent and 8 percent, respectively, year on year primarily due to softening of the market sentiment for pig iron from mid-May.
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“Pig iron prices also witnessed a sharp drop in market prices after imposition of export duty by the government on May 22, 2022. On the raw materials front, coal and coke prices moved up significantly,” said Tata Metaliks. “Profitability was severely impacted in the quarter owing to the above factors.”
Sandeep Kumar, Managing Director of Tata Metaliks, hoped the coming months would be better.
Also read: Government blows $850-million hole in metal stocks as foreigners flee export duties
“The pig iron market has stabilised and has shown a slight upward trend since the beginning of July. Coal prices have dropped significantly with prime hard coking coal having come down from $500/tonne average in May to below $300/tonne in July. All these factors present a positive outlook for pig iron business in Q2,” Kumar said.
He also expects the government’s increased investment in water infrastructure to keep the demand for DI pipes robust even though the second quarter is a seasonally weak quarter.
“Subsequent quarters are expected to be much better with the demand of DI pipe picking up and supported by additional volumes from the new DI Pipe plant,” Kumar said
At 11.14 am, the stock was down 4.88 percent at Rs 688.75 on BSE.
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