Metals, Mining Q1 Results Preview - Muted Quarter Affected By Weak NSR: Prabhudas Lilladher

Prabhudas Lilladher Report

We expect our metals coverage universe to report mixed performance in Q1 FY25 with revenue/Ebitda/profit after tax growth of -2%/3%/6% QoQ (2%/11%/7% YoY) impacted by muted demand and weak steel prices.

Domestic demand remained muted (3-5% YoY) during the quarter affected by infrastructure slowdown amidst general elections. Average net sales realisation for domestic steel companies improved 1-2% QoQ mainly aided by long products (TMT).

Flat steel prices declined by Rs 500-700/tonne QoQ affected by weak global pricing, while long product prices have improved 8-9% from March levels. Further, coking coal prices have declined sharply (-22%) QoQ, which is expected to benefit steel players from Q2 FY25.

Domestic steel pricing scenario is expected to remain sluggish during monsoon and amid the impending Union budget. Imports have reduced since Jan; however, higher Chinese supply poses a threat to global pricing.

Base metal prices have increased sharp 10- 15% QoQ during Q1 post LME banning Russian supplies, which is expected to benefit non-ferrous companies in FY25.

Key monitorables to watch out are:

1. Government of India’s stand on rising imports,

2. sustenance of HRC/ coking coal prices,

3. progress on capex and

4. demand indicators from China and developed countries.

Our top pick is Hindalco Industries.

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