Tata Steel Ltd. is expected to post a sevenfold increase in net profit from a year ago and a 60 percent rise in revenue in the three months ended September, aided by higher volumes and realisations, analysts said.
On a quarterly basis, profit may improve by 25-30 percent while revenue could increase by about 13 percent, they said.
The country’s largest private sector steel manufacturer is scheduled to declare its results for the second quarter of FY22 on November 11.
The Tata Group company reported profit after tax of Rs 1,546 crore in the corresponding quarter last year and consolidated revenue of Rs 37,154 crore. In the quarter ended June, PAT stood at Rs 8,907 crore and revenue was Rs 53,372 crore.
Brokerage views
Steel realisation is expected to increase 2 percent q-o-q and 71 percent y-o-y, led by higher steel prices in the domestic market, sequential increase in exports and a price reset in contracted volumes, Kotak Institutional Equities said.
Volumes are expected to rise 18 percent q-o-q to 4.5 million tonnes on the easing of pandemic restrictions. However, on a yearly basis, this 8 percent lower on a high base and a price-led pushback.
The brokerage expects revenue of Rs 60,049 crore for the quarter, a 62 percent increase y-o-y and 12.5 percent increase on a sequential basis.
EBITDA/tonne for the company’s India operations would decline 2 percent q-o-q to Rs 33,209, up 182 percent y-o-y, on higher coking coal costs offset by higher prices, the brokerage added.
“We estimate Europe EBITDA/tonne at $204/tonne ($89/tonne in 1QFY22 -$27/tonne in 2QFY21) primarily led by higher steel prices,” Kotak said.
EBITDA at Bhushan Steel, which Tata Steel acquired through the insolvency resolution route in 2018, is estimated to decline 5 percent q-o-q to Rs 2,900 crore due to higher costs. However, on a yearly basis, this would increase 165 percent.
This will result in a consolidated PAT of Rs 11,976 crore for the quarter, a y-o-y increase of 675 percent and a sequential increase of 35 percent.
ICICI Securities expects Tata Steel to record revenue of Rs 60,254 crore for the quarter, a rise of 62 percent from a year earlier and a 13 percent increase from the previous quarter.
Standalone steel sales volume are expected at 3.5 million tonnes, European steel sales are likely to come in at 2.2 million tonnes, and Bhushan Steel is expected to report sales volumes of 1.1 million tonnes, according to the brokerage.
For the quarter, the company’s standalone EBITDA/tonne is likely at Rs 36,500 compared with Rs 35,558 in the preceding quarter and Rs 12,861 in the same period last year.
“Consolidated EBITDA margins are likely to come in at 33.5 percent compared to 30.2 percent in the previous quarter,” the brokerage said.
It works out an annualised increase of 647 percent in PAT to Rs 12,206 crore for the quarter, up 25 percent from the preceding quarter.
Prabhudas Liladhar expects a 62 percent y-o-y rise in revenue to Rs 60,151 crore. On a quarterly basis, the revenue increase is expected to be 12.7 percent.
Tata Steel Europe is expected to report EBITDA/tonne of $250, higher by 180 percent on a q-o-q basis due to improvement in spreads, the brokerage said.
“Owing to better performance in domestic and overseas operations, we expect consolidated EBITDA to grow sharply by 26 percent q-o-q to Rs 20,330 crore,” it said. PAT is expected to grow 40 percent q-o-q to Rs 12,722 crore.
Motilal Oswal expects a 13.7 percent q-o-q rise in consolidated revenue to Rs 60,673 crore and PAT to increase 14.4 percent on a sequential basis to Rs 10,398 crore.
The Tata Steel stock was little changed at Rs 1,299.60 at 10:28 am on the NSE on November 11. 8.55. The stock has doubled so far in 2021.
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