Tata Steel Q3 profit seen at Rs 100cr, EBITDA may grow 300%

Tata Steel may focus more on domestic business and UK asset sales progress.

Analysts say India business may look good on yearly basis as sales volumes may grow 27 percent YoY (14 percent QoQ) to 2.99 million tonnes, driven by value added products and ramp-up at Kalinganagar. Blended sales realisation is estimated to increase Rs 3000-4000 per tonne QoQ.

Domestic EBITDA per tonne growth is likely to be 33 percent YoY and 15 percent QoQ due to improving cost structure from higher volumes, steel price hikes (that may more than offset coking coal spike), partial captive coking coal sourcing (35 percent) for Indian operations; lower priced carry-over inventories of coking coal; and higher ferro-chrome prices.

Europe earnings may take a hit due to lower steel spreads. Steel margin is estimated to decline QoQ on higher raw material cost and EBITDA per tonne is expected to be at USD 45 per tonne (down 34 percent QoQ) against EBITDA loss in Q3FY16.

Positive factor was sale of Scunthrope business (long products business). Weakness in pound is normally positive for its Europe operations.

Europe steel volumes may fall 25 percent YoY due to sale of the UK long products division to Greybull and lower activity levels at UK flat steel plants.

Key things to watch out for besides results are clarity on restructuring of European business, pension liability and high debt.

The stock rallied 124 percent in past one year.