Tata Steel share price in focus ahead of Q1 results today: Here’s what analysts expect

Stock Market Today: Tata Steel price having risen almost 18% year to date, riding the wave of strong steel demand in the country is also trading near all time highs seen recently. Tata Steel share price remains in focus as company will report April-June 2024 quarter performance today. Tata Steel share price was trading in the green, up around 0.2% in morning trades on Wednesday ahead of Q1 results

For the steel sector analysts have been anticipating a somewhat improved performance supported by declining raw material costs as that of coal , which may somewhat be offset by higher iron ore prices.

Volumes in the typically weak quarter are anticipated to decline sequentially though may rise year-on-year. Key input raw material prices, particularly for coking coal, are currently at $275/ton.

Firm volume growth.

Tata Steel sales volume in India at 4.94 Million tonne (mt) as reported by the company on provisional basis, have risen well over 4.79 mt in the year ago quarter On sequential basis however they are lower compared to 5.42mt in the March quarter. Not only sales are pushed at the end of a financial year, the impact of Lok Sabha elections also has led to some softness

In the European operations the rising sales in Netherland may provide support to revenues and profitability though UK sales remained flat sequentially and slightly lower on y-o-y basis.

India business likely to see normalized volume in 1QFY25, whereas overseas operations are expected to remain flat, said analysts at Motilal Oswal Financial Services.

Range bound prices

Steel prices in the country have been bearing the impact of soft global steel prices. The weak China consumption demand leads to higher exports of steel out of China keeping prices down.

In 1QFY25, average domestic hot Rolled coil (HRC) prices remained flat sequential at around ₹53,630 a tonne, down 7% YoY.

Revenue growth to be soft but profitability may improve

Revenue of Tata Steel may see limited growth in Q1. Analysts at Axis Securities expect consolidated revenue to rise slightly by 1% sequentially (down 0.4% YoY). Those at Motilal Oswal Financial Services also expect domestic revenues to fall 0.8% year-on-year and consolidated revenues to decline 2.5% year-on-year.

However profitability may get a boost in domestic and Netherland operations .

Domestic operations helped by lower coal and backward integration of iron-ore supplies may still see better profitability. Netherlands may report positive Ebitda per ton in 1QFY25 leading to improvement in performance. UK business however may see losses, which would lead to Europe Ebitda loss, said analysts.

Analysts at Axis Securities said that they expect consolidated Ebitda (Earnings before interest tax depreciation and amortisation) to increase by 15% YoY. Elara Securities also expects Ebitda to rise 17.5% yoy while those at MOFSL expect consolidated Ebitda ro rise 15% y-oy. On sequential basis nevertheless , Ebitda may still decline led by lower India volumes .

Key monitorable-

Key Monitorable in the results include

1. Management comments and guidance for way ahead in Europe.

2. Management guidance on Average Selling prices and Cost of Production

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