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Stocks of most of the steel companies are seen down in the next week owing to an apprehension that Apr-Jun earning of companies such as Hindalco Industries, Steel Authority of India, and Tata Steel are likely to be disappointing. Overall, the liquidity in the broad market will face repression next week, as the Reserve Bank of India announced yesterday that it will start auctioning 220 bln rupees of cash management bills every Monday in order to check liquidity and contain foreign exchange volatility. The action of the RBI will lead to a rise in short-term interest rates. The steel sector will not see a revival until companies completely recover from the impact of iron ore-mining ban, which was implemented two years ago. It will take around six months for these mines to resume operations. Unless there is revival in the real estate or infrastructure sector, steel will continue its slump downwards.
Tata Steel's consolidated net profit is seen falling 63% on year to 2.2 bln rupees in Apr-Jun and net sales are seen down 4% on year to 321.68 bln rupees. We expect net revenue to increase 4% YoY (down 14% QoQ) to 93 bln due to higher sales volume. Steel volumes are expected to increase 21% YoY (down 16% QoQ) to 1.9 mln tn. Realization is expected to decline 14% YoY (flat QoQ). We expect EBITDA (earnings before interest, tax, depreciation and amortisation) to decrease 9% QoQ to 27 bln rupees and EBITDA/ton to fall 10% QoQ to USD236/ton.
Tata Steel will report its Apr-Jun earnings on Tuesday. The Apr-Jun results of Steel Authority of India are due on August 14.
Stocks of most of the steel companies are seen down in the next week owing to an apprehension that Apr-Jun earning of companies such as Hindalco Industries, Steel Authority of India, and Tata Steel are likely to be disappointing. Overall, the liquidity in the broad market will face repression next week, as the Reserve Bank of India announced yesterday that it will start auctioning 220 bln rupees of cash management bills every Monday in order to check liquidity and contain foreign exchange volatility. The action of the RBI will lead to a rise in short-term interest rates. The steel sector will not see a revival until companies completely recover from the impact of iron ore-mining ban, which was implemented two years ago. It will take around six months for these mines to resume operations. Unless there is revival in the real estate or infrastructure sector, steel will continue its slump downwards.
Tata Steel's consolidated net profit is seen falling 63% on year to 2.2 bln rupees in Apr-Jun and net sales are seen down 4% on year to 321.68 bln rupees. We expect net revenue to increase 4% YoY (down 14% QoQ) to 93 bln due to higher sales volume. Steel volumes are expected to increase 21% YoY (down 16% QoQ) to 1.9 mln tn. Realization is expected to decline 14% YoY (flat QoQ). We expect EBITDA (earnings before interest, tax, depreciation and amortisation) to decrease 9% QoQ to 27 bln rupees and EBITDA/ton to fall 10% QoQ to USD236/ton.
Tata Steel will report its Apr-Jun earnings on Tuesday. The Apr-Jun results of Steel Authority of India are due on August 14.
