Tata Steel Q2 preview: Analysts expect weak set of numbers

Tata Group iron and steel company Tata Steel will release its Q2 results tomorrow. Analysts are expecting a weak set of numbers from the company.

The weak results are said to be due to the company’s weak India as well as Europe operations. Higher production costs as well as lower realisations will impact the company’s Q2 earnings.

The ET Now poll suggests that the revenue at the company is expected to inch lower by 14% from Rs 63,430 crore in the quarter-ended June to Rs 54,298 crore during the period under review. Similarly, profit after tax at the steel major is seen to take a major hit by over 62% to Rs 2,932 crore from Rs 7,764 crore.

The margins at the company are also seen to contract from 24% to 12.7% quarter on quarter (QoQ). During the same quarter last year, the company reported margins at 27%.

The decline in steel prices, both in the domestic as well as export markets, together with high energy costs in Europe are expected to dent the company’s numbers during the quarter.

The key watch-outs will be the management’s guidance on Europe operations and guidance with regard to transition to green energy.

In the previous quarter, the company’s PAT came in lower year on year (YoY) by 13% to Rs 7,765 crore. Nevertheless, the company’s total revenue from operations surprised the Street by logging year-on-year growth of 18.6%.

In September, the company announced the merger of seven of its metal and mining companies into itself for simplifying the group holding structure as well as to minimise cost. The companies to be merged into Tata Steel include Tata Steel Long Products, Tinplate Co. of India, Tata Metaliks, Indian Steel & Wire Products, Tata Steel Mining, S&T Mining Co, and TRF.