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Tata Steel hits fresh 52-week high, up over 3% ahead of June quarter earnings

Europe business' EBITDA per tonne may grow 23 percent YoY but is seen falling 40 percent QoQ at USD 63 per tonne.

August 07, 2017 / 10:20 AM IST
Iron & Steel | Imports from China, 2019: 4 percent. (Image: Moneycontrol)

Iron & Steel | Imports from China, 2019: 4 percent. (Image: Moneycontrol)

 
 
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Tata Steel shares touched a fresh 52-week high of Rs 594.70, up 3.3 percent intraday Monday ahead of June quarter earnings due later today.

Analysts feel earnings are expected to be strong on year-on-year basis, though sequentially numbers may be weak.

Consolidated profit in April-June quarter is likely to be at Rs 1,100 crore against loss of Rs 3,183 crore in year-ago quarter, according to average of estimates of analysts polled by CNBC-TV18.

Sale of investment in Tata Motors will aid profitability during the quarter. The company sold stake in Tata Motors at a price of Rs 453 per share to Tata Sons and that will realise income to the tune of Rs 3,700 crore.

Revenue from operations may increase 9.5 percent to Rs 28,902 crore compared with Rs 26,406 crore in same quarter last year.

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Operating profit (earnings before interest, tax, depreciation and amortisation - EBITDA) is seen rising 30 percent year-on-year to Rs 4,200 crore and margin may expand 220 basis points to 14.5 percent in the quarter ended June 2017.

India's sales volumes increased 28 percent to 2.75 million tonnes due to strong volumes in India and ramp-up at Kalinganagar plant. Hence, EBIDTA per tonne is expected to grow 4 percent YoY and fall 19 percent QoQ at Rs 10,900 per tonne.

EBITDA per tonne may decline sequentially due to lower steel prices, higher coking coal costs, lower ferro alloy income and no export incentives.

Europe business' EBITDA per tonne may grow 23 percent YoY but is seen falling 40 percent QoQ at USD 63 per tonne.

EBITDA per tonne of the European operations is likely to decline on a sequential basis due to lag impact of higher coking coal prices and iron ore price; and lower steel prices.

Europe steel profitability may be aided by sale of low profit businesses - UK long products division ((Scunthorpe)) to Greybull and specialty steels business (Rotherham) to Liberty.

At 10:09 hours IST, the stock price was quoting at Rs 592.90, up Rs 17.40, or 3.02 percent on the BSE.

Posted by Sunil Shankar Matkar
first published: Aug 7, 2017 10:20 am

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