Metals Q1 Results Preview: Non-Ferrous Firms To Outperform Ferrous Companies

In the first quarter of fiscal 2025, the earnings of non-ferrous companies that deal with metals like aluminium, copper, and zinc could outperform the results of ferrous or steel players.

Ebitda numbers of non-ferrous companies are set to increase by 15-20% sequentially due to a sharp increase in base metal prices, according to Nuvama Research. On the other hand, primary steel producers could see an Ebitda decline led by lower volumes and steel prices, said Systematix Institutional Equities.

During the quarter, prices of zinc, lead, aluminium, copper, Silver and gold rose between 5% and 19%. The majority of the price uptick started in March 2024 after the US and the UK imposed a ban on trading metals originating from Russia.

Hindustan Zinc Ltd., Vedanta Ltd., Hindalco Industries Ltd. and National Aluminium Co. are set to see an average 36% rise in Ebitda on a year-on-year basis, driven by higher volumes, high base metal prices, and the benefits of backward integration, according to Systematix Institutional Equities.

Vedanta could clock an annual Ebitda uptick of 58%, according to Nuvama Research. The 15–16% uptick in zinc and aluminium prices can partially offset lower oil and gas volumes, the brokerage said.

Nuvama Research also states that the improvement in aluminium prices would offset lower profits in the copper division, thus helping the uptick in Hindalco Industries' Ebitda.

Nuvama Research expects Ebitda of steel players to fall 5–13% sequentially due to lower volume and lower flat product prices. However, as per Bloomberg consensus estimates, Ebitda of most steel players on an annual basis would see an uptick. This could be because of lower coking coal costs.

On an Ebitda per tonne basis, the brokerage believes that the ferrous company could report an improvement in the range of Rs 100–800 per tonne.

As per Systematix Institutional Equities,

Steel producers like JSW Steel Ltd., Steel Authority of India Ltd. and Tata Steel Ltd. are estimated to report Ebitda growth of 6% year-on-year but 9% decline sequentially, according to Systematix Institutional Equities.

The toplines of steel producers could see a single-digit downtick on suppressed prices and lower volumes due to planned maintenance shutdowns, added the brokerage. Volume has mainly decreased for JSW Steel and Tata Steel.

Coal India Ltd.’s Ebitda may decline 7% year-on-year primarily due to lower realisation from e-auction sales, according to Nuvama Research. This could partially be offset by higher volume. Systematix Institutional Equities, too, expects a 9% decline.

While the coal off-take grew 5% as per company reports, they declined 2% sequentially, according to Axis Securities. The main reason for potential weaker results would be the 60% e-auction premium, the brokerage expects compared to 66% in the previous quarter. This could lead to flat revenue growth on a quarter-on-quarter basis.