Tata Steel to share Q3 results today. Losses at Tata Steel Europe may widen; muted sales, volume growth likely

Tata Steel Ltd is all likely to report a muted set of December quarter results as losses at Tata Steel Europe may widen due to adverse operating leverage at Tata Steel-UK operations and a drop in realisation. Analysts are either expecting thin profit or losses for Tata Steel on a single-digit drop in sales. Ebitda margin is seen expanding on both sequential and on year-on-year basis. Volume growth is seen at 2 per cent.

PhillipCapital expects Tata Steel to report profit of Rs 121.20 crore against a profit of Rs 702.70 crore in the September quarter and a loss of Rs 2,384.20 crore in the same quarter last year. Revenue is seen falling 5 per cent YoY and 3 per cent QoQ to Rs 54,138.60 while Ebitda margin is seen improving to 8.8 per cent against 7.7 per cent in September and 7.1 per cent in the same quarter last year. This brokerage sees loss at Rs 122.30 crore

"Consolidated volumes are expected to rise 2 per cent QoQ. Domestic realisations to also rise 2 per cent QoQ. Standalone Ebitda to improve 6 per cent QoQ. Europe may continue to make losses at operational level)," it said.

ICICI Securities said loss at Tata Steel Europe would widen further due to adverse operating leverage at Tata Steel-UK operations and drop in realisation. It sees consolidated revenue rising 2 per cent YoY (4.5 per cent QoQ) to 58,204 crore while it sees loss at Rs 122.30 crore.

"Domestic Ebitda/te is likely to be stable QoQ despite a decline in sales volume. Losses at TSE may increase as realisation was down by GBP 35/te QoQ and adverse operating leverage, particularly, in the UK," it said.

Prabhudas Lilladher, which sees profit at Rs 250 crore, said TSE contribution to deteriorate further sequentially on GBP 30-35 QoQ drop in European prices and weak volumes at Tata Steel UK (down 10 per cent QoQ).

"Tata Steel UK will drag subsidiaries Ebitda loss QoQ to over $180/t; cutting FY24 Ebitda by 9 per cent on poor TSE contribution," it said.

Meanwhile, Axis Securities said India sales volume grew 1.2 per cent QoQ, led by higher domestic sales on account of strength in domestic demand. Europe sales volume declined 2 per cent QoQ; Netherlands volume was up 5 per cent QoQ at 1.29 mt but down 8 per cent YoY due to BF relining. UK sales volume was at 0.63 mt, down 5 per cent YoY and 14 per cent QoQ, due lower demand, it said.

"Consolidated sales volume were marginally down 0.2 per cent QoQ. Steel HRC prices (traders market ex-Mumbai) firmed up by 2 per cent QoQ in Q3FY24. We expect consolidated revenue to grow 3 per cent QoQ led by higher sales realisation at Indian operations and higher sales volume at India partially offset by lower sales volume and realization in Europe," it said.

Axis Securities said it expects Ebitda to de-grow 3.5 per cent QoQ led by lower Ebitda/tonnes at India on account of higher coking coal consumption cost, which negates gains from higher realization and sales volume at India and weaker Ebitda/tonnes at Europe due to lower sales volume and sales realisation partially offset by lower coking coal consumption cost

"We expect Ebitda/tonne at Europe to decline QoQ on account of lower sales volume and operating leverage," it said.