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    Slowdown in steel industry raises possibility of earnings downgrades, lower valuations

    India’s three largest steel players are trading at 6-8 times their estimated EV/EBITDA for FY20, which is a bit on the higher side in light of the expected cut in earnings

    Jitendra Kumar Gupta
    July 19, 2019 / 02:57 PM IST
    Slowdown in steel industry raises possibility of earnings downgrades, lower valuations

    PRO Only Highlights
    -      Quarterly performance largely backed by improved realisations
    -      Medium-term triggers China plus and protectionist measures for tyre industry
    -      Valuations not inexpensive; but improved medium-term outlook

    The fall in domestic steel prices is posing a question mark on the future earnings growth of steel companies. Markets were earlier concerned about how the slowdown in capex may affect steel demand, but this has now expanded into a broader economic slowdown. The visibility on near-term growth is getting clouded due to stress in steel consuming industries such as automobile, consumer goods and construction. Steel prices: A falling trend Since March, hot-rolled coil (HRC) prices in Mumbai have fallen seven percent,...

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