Tata Steel Q1 results: Europe to weigh; analyst views, share price targets & more

 

Tata Steel may report up to 95 per cent year-on-year (YoY) drop in June quarter profit on a 6-11 per cent fall in sales. The numbers would be dragged by losses at Europe, thanks to  weak demand and higher costs, partially offset by improved sequential realisations.

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Kotak Institutional Equities pegs Tata Steel‘s June quarter adjusted profit at Rs 350.30 crore compared with Rs 7,105.20 crore in the year-ago quarter. It sees June quarter sales at Rs 59,400 crore compared with Rs 63,430 crore, down 6.4 per cent YoY.

“We expect steel realisations to remain almost flat QoQ (fall 16 per cent YoY) on account of better product mix and auto contract revisions. We expect standalone volumes to increase 18 per cent YoY (fall 8.3 per cent QoQ) to 4.56 million tonnes. India Ebitda per tonne will decline 19 per cent QoQ to Rs 13,599 per tonne (down 36 per cent YoY) led by higher input costs,” it said.

Elara Securities expects Tata Steel to report recurring profit at Rs 437.50 crore. It sees sales to drop 10.7 per cent YoY to Rs 56,637 crore. Motilal Oswal pegs profit figure at Rs 969.70 crore. It sees sales at Rs 59,145.30 crore. The brokerage, which has a share price target of Rs 112 on the stock, said steel prices which have corrected almost 10-15 per cent since February and have neared bottom and that a majority of the downside has been priced with no major price correction expected in the near term.

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“We await details on debt reduction and capex timeline, which will double the domestic capacity by FY30. The management guidance on continuation, pension liability, and support for UK business are key monitorables,” the brokerage said.

Analysts said China’s central bank recently extended its policies (announced in November 2022) to support the real estate market till the end of 2024. The extended policies are likely to encourage financial institutions and property firms to actively support property developers. This could likely aid the real estate sector in China with further measures expected going forward, they said.

“Metal names have reacted positively to anticipated demand uptick in China, even as demand greenshoots are yet to be seen on the ground. China remained active in export markets, with YTD exports up 35 per cent YoY. We remain constructive on the metals space with Hindalco/JSPL/Tata Steel being our preferred pick,” JM Financial said in a recent note.

This brokerage, meanwhile, believes Tata Steel may report a consolidated loss of Rs 900 crore for the quarter while it pegs its consolidated sales at Rs 56,900 crore.

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The average stock price on the stock at Rs 129, as per the publicly available Trendlyne, suggest 11 per cent upside.

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