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Stocks of major steel companies are seen down next week weighed down by disappointing Oct-Dec results. Primary steel producers such as Steel Authority of India Ltd and Tata Steel Ltd reported poor earnings for the quarter ended December. Steel Authority posted a net profit of 4.84 bln rupees, down 23.4% on year. Lower net sales realisation due to subdued market combined with higher finance costs and royalty payments to states on coal proved a drag on the earnings. Tata Steel reported a consolidated net loss of 7.63 bln rupees, compared with a loss of 6.02 bln rupees a year ago, due to weak performance in domestic operations.
A fall in consolidated net sales and other income were also responsible for the loss widening. Steel stocks will track the local stock market as well for some direction, but will largely be governed by earnings. Tata Steel will be the worst performer among the steel stocks. JSW Steel Ltd and Jindal Steel & Power Ltd are also seen down next week but their fall may not be as sharp as that of Tata Steel. JSW Steel will follow the trend prevailing in other steel stocks.
