Realisations and steel prices are much better compared to last year’s average, which makes the management even more confident of delivering better numbers
Tata Sponge has been able to capitalise on this trend thanks to the support from Tata Steel, parent company, for the supply of iron ore and its proximity to iron ore belt and ports.
Though brokerage houses have maintained their buy calls on the stock, they also highlighted that the earnings figures missed expectations. However, going forward, the situation improve, they added.
Tata Steel's Q2 has missed street estimates as its European business struggled for the quarter. In an interview to CNBC-TV18, Ritesh Shah of Investec shared his readings on the numbers.
The right product mix and consolidation among marginal players have helped companies like Tata Steel grow faster even in a seasonally weak quarter.
Operating profit is expected to increase 75 percent year-on-year to Rs 5,200 crore and margin may expand 520 basis points to 16 percent in July-September quarter.
"We expect continued focus on the EU turnaround plans for much of the current fiscal year," JM Financial said while revising estimates upwards primarily on higher spreads at Corus at USD 75 per tonne FY18/19.
More than the results the street will watch out India EBITDA per tonne, Europe EBITDA per tonne, debt reduction plan and JV with Thyssenkrupp.
We will pursue an aggressive growth path in India because India is a place where demand opportunity is going to grow, Koushik Chatterjee, ED (Finance and Corporate), Tata Steel.
The company had posted net loss of Rs 3,213 crore on the back of an exceptional item of Rs 2,857 crore.
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.
Net Sales are expected to increase by 9.6 percent Q-o-Q (up 7.4 percent Y-o-Y) to Rs 30110 crore, according to Religare.
Pritesh Jani of Religare Capital said, "we are entering an uncertain profitability scenario because of coking coal."
Tata Steel's second quarter profit may fall 46.3 percent year-on-year to Rs 821 crore and revenue is seen declining 7.4 percent to Rs 27,150 crore, according to average of estimates of analysts polled by CNBC-TV18.
Sales are expected to increase by 5.7 percent Q-o-Q (down 9 percent Y-o-Y) to Rs 26679 crore, according to ICICI Securities.
Pritesh Jani of Religare Capital Markets says the EBITDA/tonne for Indian business was in line with their expectations. However, Europe at USD 50/tonne was a positive surprise because in last quarter they were at minus USD 15/tonne, so it was a swing of plus USD 65
Tata Steel's first quarter profit is seen falling 61.7 percent to Rs 292 crore and revenue declining 3.9 percent to Rs 29,110 crore compared to year-ago period, according to average of estimates of analysts polled by CNBC-TV18.
Sales are expected to decrease by 1.8 percent Q-o-Q (down 4.4 percent Y-o-Y) to Rs 28970.8 crore, according to ICICI Securities
UK assets sale and likely further revival in Indian operations will be key factors to watch out for.
Credit Suisse maintains an underperform rating with a target price of Rs 180 per share. It expects continued weakness at the European operations as it mothballs existing downstream facilities and realigns production while incurring related fixed costs for a few more quarters.
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 decline 32.3 percent year-on-year to Rs 2,465 crore and margin may contract 190 basis points to 8.3 percent during the quarter.
Sanjiv Paul, MD of Tata Metaliks says that lack of structural changes, like new projects, is dragging the demand.
Revenue during the quarter is seen falling 18.9 percent to Rs 29,526 crore compared to Rs 36,427 crore in same quarter last fiscal.
Weak commodity prices, delayed capex recovery and soft rural demand are the key factors that will weigh on June quarter corporate earnings, says CRISIL Research.