Tata Steel Q3 Preview: Expect profit to double YoY, but shrink sequentially

They expect the company to double its quarterly profits for October-December period, while penciling in a strong growth in revenue. However, sequentially both numbers are likely to be lower.

“Tata Steel‘s top-line is expected to grow 33 per cent YoY in Q3FY22 led by strong improvement in realizations in both India as well as in Europe. Its consolidated Ebitda is likely to increase by 35 per cent YoY mainly due to higher spreads at its Indian and European steel businesses,” said IDBI Capital.

The broker pegs net profit for the quarter at Rs 7,905 crore against Rs 3,922 crore in the corresponding quarter in the last year. However, it will be significantly lower than September quarter’s Rs 12,548 crore.

According to it, the Ebitda margin will also see improvement year-on-year but decline quarter-on-quarter.

In the September quarter, Tata Steel had reported 661 per cent growth in net profits and 55 per cent jump in revenues, riding on rising commodity prices and heightened demand.

For the December quarter, PhillipCapital said it expects India and Europe realisations to increase Rs 2,000/tonne and $50/tonne, respectively, adding that volumes will likely be flattish.

“Domestic margins will come under pressure due to high coking coal cost. Europe is expected to maintain $200 Ebitda/tonne,’ the broker said.

Rising raw material prices have plagued almost every industry during the December quarter and steel has not been untouched. Margins have contracted across sectors for the quarter.

IDBI Capital said it would watch for profitability and cash flow from European operations, and update on growth capex.