Tata Steel Q4 results preview: 90% plunge in profit likely for Tata group firm as Europe drags

Tata Steel is likely to report a up to 99 per cent plunge in consolidated net profit for the March quarter on a 12-14.5 per cent fall in revenues, dragged by losses in Europe business, a couple of brokerages anticipated. Earlier this month, Tata Steel said it recorded a 3 per cent rise in consolidated steel production at 7.77 million tonne (mt) in the March quarter. The company's total steel output stood at 7.55 mt in the year-ago period. The steel maker added that its India unit achieved crude steel production of 5.15 mt for the quarter, up 3 per cent sequentially.

On the other hand, Tata Steel Europe's steel deliveries rose 7 per cent sequentially to 2.13 mt on improved demand environment but its product mix was affected due to the upgradation at CM21 (Cold Rolling mill).

ICICI Securities said it sees Tata Steel's standalone operations to report an Ebitda per tonne of Rs 13,250 per tonne compared with Rs 11,350 per tonne in Q3FY23. For Q4FY23, it expects European operations to report a loss at the Ebitda per tonne level. For Q4FY23E, European operations are likely to report negative Ebitda per tonne of $110, it said.

"For Q4FY23E, on a consolidated basis, top line is expected to decline 14 per cent YoY but rise 5 per cent QoQ to Rs 59,854 crore. Tata Steel's consolidated Ebitda for Q4FY23E is expected to increase 32 per cent QoQ to Rs 53,64 crore. Consolidated Ebitda margins for Q4FY23E are likely to come in at 9 per cent compared to 7.1 per cent in Q3FY23. Ensuing consolidated PAT for Q4FY23E is likely to come in at Rs 443 crore, down 95 per cent," ICICI Securities said.

Tata Steel shares have dropped 10 per cent this year so far. This is against a 6 per cent fall in the BSE Metals index. In the last five days, the stock is up 2 per cent against a 1.3 per cent rise in the benchmark index.

Nuvama expects Tata Steel's profit at Rs 192.20 crore against Rs 10,030 crore, down 98 percent YoY. It sees sales at Rs 59,299 crore, down 14.5 per cent YoY.

"We expect Tata standalone Ebitda per tonne to increase by 35 per cent QoQ to Rs 13,998/tonne owing to improvement in realisation and volume and a 10 per tonne QoQ dip in coking coal price. Tata steel Europe may report a negative Ebitda per tonne of $107 per tonne compared to minus $95 per tonne in Q3FY23 due to lower realisation, partly offset by lower CoP," Nuvama said.

Phillip Capital sees adjusted profit at Rs 170 crore. Sales are seen dropping 14.8 per cent YoY to Rs 59,089 crore. Volume is likely to be higher sequentially at 7.6 million tonnes against 7.2 million tonnes in the December quarter but lower than 8 million tonnes in the year-ago quarter.

"Overall Ebitda per tonne may improve driven by domestic business (Europe continues to make losses at operational level)," Phillip Capital said.

Elara Securities expects Tata Steel to report a profit of Rs 100 crore for the March quarter. Revenue for the quarter is seen falling 12.5 per cent YoY to Rs 60,117 crore from Rs 68,711 crore in the year-ago quarter.

"For Tata Steel, while standalone margin is expected to witness improvement, weak performance in Europe would result in limited uptick in consolidated margin," it said.

For Tata Steel’s Europe division, Kotak Institutional Equities pegged Ebitda loss of $111 per tonne, led by weaker prices and stable costs.