Tata Steel, the world's sixth largest steel company, will announce its second quarter (July-September) results on Wednesday. According to a CNBC-TV18 poll, the key issues to watch out for are 1) company's debt reduction plan, 2) progress on expansion plans in India, and 3) funding of Tata Steel Europe (TSE) modernisation and upgradation program, as TSE's cash flows are insufficient to support its capex.
Steel maker had a debt of Rs 61,289 crore on its book at the end of June quarter and net debt was approximately Rs 51,000 crore. More than 60 percent of net debt is in dollar terms.
Analysts expect the company to report consolidated profit after tax at around Rs 339 crore in second quarter as against net loss of Rs 364 crore in a year ago period. Net sales are seen going up by 3.1 percent year-on-year to Rs 34,904 crore in the quarter gone by.
Earnings before interest, tax, depreciation and amortisation (EBITDA) may jump 64.5 percent on a yearly basis to Rs 3,364 crore and operating profit margin may expand 360 basis points Y-o-Y to 9.6 percent in three-month period ended September 2013.
Tata Steel India (TSI)
Net revenue of its Indian operations will increase due to higher sales volumes on ramp up of capacity. Realisation is expected to increase 1 percent sequentially, but that may decline 6 percent year-on-year.
Analysts feel EBITDA per tonne will decline due to 1) fall in realisation particularly for long steel products, 2) losses on un-hedged forex liabilities, 3) high raw material cost.
TSE (Europe)
In case of Europe operations (erstwhile Corus), the most important factor to watch out for is EBITDA per tonne that is expected to decline to USD 25 per tonne in September quarter as against USD 44 per tonne in June quarter.
Analysts expect volumes to stay flattish sequentially at 3.15 million tonne, but lower by 8 percent compared to a year ago period due to weak underlying demand and weak realisation from a lag affect of lower prices in Q1FY14.
TSE realisation lags spot prices by 2-3 months due to index contracts.
South East Asia
Analysts expect EBITDA per tonne at around USD 15.
Tata Steel shares closed at Rs 352.30, down 2.15 percent on the BSE.
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