Tata Steel, SAIL Margins Contracted, Ebitda Rise Likely For NMDC, Say Analysts
Tata Steel and SAIL's realisations in September quarter may have fallen 8% year-on-year. But impact of lower prices may be partially mitigated by reduced coking coal costs.
Weak metal pricing for the majority of the second quarter of financial year 2025, is expected to impact earnings of companies like Tata Steel Ltd., Steel Authority of India Ltd. and Jindal Stainless Ltd.
Both ferrous and non ferrous segments are expected to see a sequential margin contraction, as per brokerages.
Axis Securities Ltd. expects Tata Steel and SAIL to see an 8% year-on-year decline in realisations. However, the impact of lower prices may be partially mitigated by reduced coking coal costs.
Steel Companies
Nuvama anticipates a sequential 16–28% drop in earnings before interest, tax, depriciation and amortisastion for ferrous steel companies in the second quarter of fiscal 2025, driven by lower steel prices, which fell by Rs 2,400–3,500 per tonne.
Ferrous companies are projected to see a sequential Ebitda per tonne decline of Rs 1,300–2,400, with Jindal Steel & Power Ltd. facing the steepest drop, as per Nuvama. Jindal Stainless is expected to remain flat, while Tata Steel's losses in Europe are likely to increase. Nuvama also predicts that SAIL may fall into a net loss.
The brokerage expects sales volumes of all companies except Jindal Steel and Power Ltd. to sequentially rise 2%. Motilal Oswal Financial Services Ltd. expects volumes to be flat due to monsoons and cheaper imports.
Non Ferrous Companies
Non-ferrous companies are expected to post better revenue, Ebitda and net profits on sequential basis, compared to ferrous companies, according to Motilal Oswal. The brokerage expects the aggregate Ebitda fall for non-ferrous companies to be in mid-single digits.
Nuvama expects Hindalco Industries Ltd.’s Ebitda to be flat quarter-on-quarter despite lower aluminium prices due to its hedging strategy.
Hindustan Zinc Ltd.’s Ebitda could edge up 1.6% quarter-on-quarter on higher silver volumes, and lower zinc cost of production, Nuvama expects.
While, Vedanta’s Ebitda is estimated at 5% quarter-on-quarter amid lower base metal prices.
Mining Companies
Mining companies are expected to report a sequential decline in financials in the second quarter, due to weak volumes amid ongoing monsoon and softened prices, Motilal Oswal said. While NMDC Ltd. could see a good quarter, Coal India Ltd. could see weakness.
Nuvama expects NMDC to see a 46% surge in Ebitda due to higher iron ore prices, supported by a 2% year-on-year rise on volumes.
Axis Securities noted that Coal India's reported off-take fell 3% and 15% on an annual and quarterly basis, due to the strong monsoon witnessed in the July-September quarter. The brokerage model a 50% e-auction premium compared to 58% in the last quarter. Both these factors could lead to a decline in revenues sequentially.
Axis expects Coal India's Ebitda to fall 9%, while Nuvama expects a 13% annual decline.
