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Last Updated : Aug 11, 2015 01:57 PM IST | Source: CNBC-TV18

Tata Steel may post Q1 loss Rs 440 cr on lower realisation

Revenue during the quarter is seen falling 18.9 percent to Rs 29,526 crore compared to Rs 36,427 crore in same quarter last fiscal.

 
 
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Tata Steel is expected to report consolidated net loss of Rs 440 crore in the quarter ended June against profit of Rs 337 crore in the year-ago period, according to average of estimates of analysts polled by CNBC-TV18. Lower steel prices and China's cheap imports may impact overall earnings.


There is a wide range for expectations of bottomline. According to them, the profit could be Rs 260 crore and maximum loss may be around Rs 1,000 crore in Q1.


Revenue during the quarter is seen falling 18.9 percent to Rs 29,526 crore compared to Rs 36,427 crore in same quarter last fiscal.

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Domestic sales volumes may increase 1.9 percent year-on-year to 2.14 million tonnes and European Union sales volume is likely to rise 3.1 percent to 3.3 million tonnes while South East Asia is expected to witness a 20 percent degrowth in volumes.


Realisations may be the biggest drag for earnings as analysts see lower steel realisations in India as well as Europe. Cheap imports from China and also from neighbouring European nations may impact realisations.


Operating profit may plunge 48.4 percent year-on-year to Rs 2,206 crore and margin may decline 420 basis points to 7.5 percent in the quarter gone by.


Consolidated operating profit is expected to decline sharply due to higher steel imports & weak domestic demand and lower steel realisations globally. Indian business operating profit may be impacted by weak realisations, restart of iron ore mines against some high cost imported iron ore inventory; and provision towards District Mineral Foundation (DMF).


European Union operations may be impacted by lower steel prices but partly cushioned by a decline in iron ore prices and coking coal costs. Analysts expect EBITDA per tonne at approximately USD 40 per tonne, which is lower on a Y-o-Y basis.


South East Asia's operating profit margin may continue to suffer from low cost Chinese imports. In Q1FY15, EBITDA per tonne was approximately at USD 5 per tonne while in Q4FY15, it was negative.


Key issues to watch out for would be view on duties to safeguard Indian steel industry, imports from China & global iron ore prices, commissioning of Kalinganagar and debt reduction methods (as company transferred holding in Titan to Tata Sons).



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First Published on Aug 11, 2015 10:05 am
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