Earnings Outlook:Tata Steel PAT seen hit by high costs, muted topline

21 Jul 2022

Tata Steel Ltd’s bottomline would like have been hit due to lower operating profit and moderate revenue growth in the quarter ended June.

The operating margin of the company is also seen as shrinking due to input cost pressures.

In Apr-Jun, Tata Steel’s consolidated net profit is seen at 77 bln rupees, 14% lower than a year ago and 21% lower than the previous quarter, according to an average of estimates by five brokerage firms.

The company’s consolidated net sales is estimated at 612.6 bln rupees, up 17% on the year and down 11% on the quarter.

The company will declare its results on Monday.

Early this month Tata Steel disclosed its Apr-Jun volume figures from its domestic plants which showed a decline from both, the year ago period and the previous quarter.

The crude steel of the company sales declined 2.2% on the year and 21% on the quarter to 4.06 mln tn.

The company said this was “due to moderation in exports following the imposition of 15% export duty.”

Revenue is however expected to show a moderate growth.

Brokerage Kotak Institutional Equities expects Tata Steel’s realisation to increase 11% on the year and 4% on the quarter which will aid the revenue growth.

However, higher coking coal costs will likely have led to fall of 44% on the year and 20% on the quarter in EBITDA (earnings before interest, tax, depreciation, and amortisation) per tn to 18,780 rupees, the brokerage said.

Brokerage IDBI Capital Market Services estimates a decrease of 15.3% on the year in Tata Steel’s consolidated EBITDA.

The brokerage said post earnings announcement the market will watch for Tata Steel’s profitability and cash flow from European operations, and also for an update on growth capital expenditure.