Tata Steel may have gone into red in the September quarter due to European blues

 Tata Steel may have gone into red in the September quarter due to European blues

According to five experts surveyed by Moneycontrol, the combined loss for the quarter would be Rs 700 crore, down from Rs 1533.90 crore in profit the previous year. Net sales to Rs 54138.60 crore is expected to decrease by 10 both YoY and QoQ.

The revenue of Tata Steel Europe is anticipated to decrease by 18% sequentially and by 15% YoY to $2.10 billion. The projected EBITDA loss would increase to $267 million from $191 million in the previous year.

Tata Steel Ltd. most likely experienced losses in the September quarter as a result of a poor week in its European operations. On November 1, the steel firm will release its financial results.

Five experts surveyed by Moneycontrol predict that the combined loss for the quarter will be Rs 700 crore, down from a profit of Rs 1,533.90 crore in the previous year. Net revenue is expected to decline by 10% on a quarterly and annual basis to Rs 5,4138.60 crore.

PhilipCapital forecasts almost stable volumes for the domestic operations over the next several years, but a 4% sequential reduction in domestic realisations of Rs 2,500 per tonne. decreased realisations balance decreased coking coal prices, and a minor improvement in EBITDA per tonne is anticipated.

The revenue of Tata Steel Europe is anticipated to decrease to $2.10 billion, a decrease of 15% year over year and 18% sequentially. It is anticipated that the EBITDA loss would increase to $267 million from $191 million in the prior quarter and $219 million a year earlier. Analysts speculated that fewer exports and poorer realisations are to blame for Europe's poor performance.

Tata Steel's sales volume is predicted to shrink by a modest 1.5 percent on a quarterly basis in its standalone business and by 10 percent on a quarterly basis in its European business in Q2FY24. This is in spite of the weakening caused by the seasonal monsoon, since total demand was steady. The analysts predict that EBITDA per tonne would decline sequentially by 7% to Rs 1,120, mostly as a result of a larger base from exchange gains in the prior quarter.

PhilipCapital projects a 4% sequential decline in Tata Steel's total volumes, mostly as a result of decreased sales in Europe. In Europe, realizations are down $75 per tonne, while in India they are down Rs 2,500 per tonne.

Analysts noted that during the quarter, Tata Steel's European unit suffered a decline in realisations, a reduction in exports from the Netherlands, and a lower absorption of fixed costs, all of which had an impact on performance.

Prices for long and flat steel declined by Rs 3,000 and Rs 900 per tonne, respectively, in the September quarter compared to the previous quarter. Due to a lag effect, coking coal prices are predicted to decrease by $45–55 per tonne in Q2FY24, whereas iron ore costs decreased by Rs 400 per tonne on a quarterly basis.

For the India business, EBITDA is expected to rise somewhat, according to ICICI Securities. However, they anticipate growing losses at the Tata Steel European level as a result of the Ijmuiden blast furnace relining expenses and unfavorable price-cost impacts. The substantial drop in long steel pricing in Q2FY24 is anticipated to result in lower EBITDA reports from Tata Steel Long Product.

BoB Capital draws attention to the potential impact of postponed capital expenditure plans on Tata Steel's rise in profitability. In addition, they raise the possibility that the company's upstream activities in the UK may be closed in the event that a workable alternative isn't discovered, which may result in higher restructuring expenses for downstream operations.