Tata Steel, one of the country's largest steel companies, is likely to disappoint analysts with third quarter earnings on February 4. It may post a loss of Rs 1,000 crore during the quarter against profit of Rs 157.11 crore in year-ago period, according to analysts polled by CNBC-TV18. Lower global steel prices and weak demand may impact overall earnings while higher steel imports may hurt operations.
Revenue is likely to decline 15.7 percent to Rs 28,355 crore in quarter ended December 2015 compared to Rs 33,633 crore in corresponding quarter of last fiscal.
Operating profit may plunge 49.6 percent year-on-year to Rs Rs 1,550 crore and margin may contract 360 basis points to 5.5 percent in Q3.
Analysts say ferro alloys business may contribute to topline of domestic business.
Factors that may be influencing EBITDA (earnings before interest, tax, depreciation and amortisation) per tonne would be decline in steel realisations, normalisation of supply from iron ore mines, inventory losses if any (In Q2FY16, it incurred losses on purchase of iron ore and pellets) and higher ferro alloys contribution.
Europe's sales volumes are expected to come in flat at 3.3 million tonnes. In Q2FY16, Europe business reported an EBITDA loss after three years.
Analysts expect Europe EBITDA per tonne could be more disappointing one due to lower European steel prices, decline in international iron ore prices & coking coal costs and cross-currency movements.
South East Asian operations may continue to remain under pressure due to poor steel spreads from cheap steel imports from China.
Positive could be sale of its European long product division and any comment on minimum import price.
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