Tata Steel Q3 : Lower realisations in Europe may impact consolidated revenues, earnings performance

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Also Read- Karnataka Bank shares plunge 12.6% after Q3 earnings, hit 2-week low Analysts at Elara Securities India Pvt Ltd in their Q3 result preview said that they expect a uptick in steel prices to provide relief to steel firms in their steel coverage universe. However, this benefit might be partly offset by higher coking coal prices and softer volume.

Following a challenging pricing environment in Q2FY24, average prices in Q3FY24 for flat and long products showed a recovery in the range of 1-4% sequentially. Thus, they expect blended realization for most steel firms, to improve in the range of ₹1,500-2,500 per tonne sequentially.

For Tata Steel they expect volumes to remain flat yoy Provisional sales volume in India for Tata Steel grew by 1.2% sequentially to 4.88 MT, led by higher domestic sales on account of strength in domestic demand. Steel production volumes stood higher vis-a-vis sales volumes at 5.32MT, up 6% yoy and sequentially, implying some inventory build-up said analysts at Axis Securities.

Analysts at PhillipCapital Research expect the domestic Realizations to rise 2% sequentially for Tata Steel which will drive the improvement in Earnings before interest Tax depreciation and amortisation (Ebitda), Tata Steel Europe performance, however, may remain a drag on Tata steel consolidated. Losses are expected to continue due to seasonal weakness and lower realisations said analysts at PhillipCapital.

They expect sequential better standalone performance for Tata Steel, while Europe will see further losses. Those at Axis Securities model an expanded Ebitda per tonne loss of $180 in Europe versus a loss of $137 in Q2FY24 on account of lower sales volume and sales realization, which could be only partially offset