Earnings Outlook
Higher sales, drop in cost may aid Tata Steel PAT in Jan-Mar
This story was originally published at 19:45 IST on 7 May 2025
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By Avishek Rakshit
KOLKATA – Higher sales volume and lower costs due to declining coking coal prices are expected to help Tata Steel Ltd. report extremely high profit growth for the March quarter, but the company may not be able to reap the benefits of marginally higher domestic steel prices due to the stress on its European operations. In fact, the top line may decline in the March quarter, according to analysts tracking the company.
The flagship company of the Tata group is expected to report a high 76% on-year jump in its consolidated net profit for the March quarter at INR 11 billion, but consolidated sales could swing down over 5% on year to over INR 555 billion, according to the average of estimates from 15 brokerages.
Sequentially, the consolidated net profit is likely to rise by a whopping 230% and revenue is expected to increase over 3%, according to the estimates. Tata Steel had reported a consolidated net profit of over INR 6 billion rupees in the year-ago quarter, and of over INR 3 billion in Oct-Dec. Its consolidated revenues were nearly INR 587 billion in the year-ago quarter, and around INR 537 billion in preceding quarter. The steelmaker will declare its financial results for the quarter and year ended March on Monday.
Equirus Securities Pvt. Ltd. has the highest estimate for Tata Steel's March quarter consolidated net profit at over INR 16 billion and YES Securities (India) Ltd. has the lowest at over INR 4 billion. Kotak Institutional Equities pegged the highest revenue exceeding INR 577 billion, and JM Financial Institutional Securities Pvt. Ltd. estimated it the lowest at over INR 527 billion.
In a note, Anand Rathi Share and Stock Brokers Ltd. said that during Jan-Mar, there was strong demand for steel from project and trade segments and domestic sales increased with reduction in steel imports. Bulk hot rolled coil steel import, at 297,000 tonnes, was the lowest since September 2023. This resulted in an increase in hot rolled coil steel prices by INR 850 per tonne sequentially to INR 48,608 per tonne in Jan-Mar, Anand Rathi said, adding that some companies increased prices of hot rolled coils further to INR 52,700 per tonne, and to INR 58,300 per tonne for cold rolled coils in April. Similarly, primary rebar prices, which remained range-bound in Jan-Mar, improved recently by INR 1,000 per tonne to INR 57,000 per tonne.
Steel companies with higher exposure to flat products are expected to benefit from the uptick in prices which have been on the rise due to improving domestic demand, imposition of safeguard duty, and expectations of improvement in demand from Europe. China's endeavour to rationalise its steel-making capacity could also lead to shorter global supplies and hence improve global steel prices.
Declining coking coal prices are also expected to aid the profits of steel companies, including Tata Steel. According to officials in the steel industry, coking coal prices fell 8% sequentially to $199 per tonne during the March quarter and are currently at around $180-$185 per tonne, a four-year low. Brokerages said steel companies are expected to have saved $10-$15 per tonne in production costs during the March quarter and this would boost profits.
Some brokerages, however, cautioned that although Tata Steel might register volume growth, consolidated revenue could decline on year due to lower steel price realisation in India and Europe. While Nuvama Wealth Management Ltd. is of the view that Tata Steel's blended realisation from sales is likely to remain flat on quarter, Prabhudas Lilladher expects it to improve by 1%.
However, Tata Steel's European operations could continue to drag down its performance. Kotak Institutional Equities said the company's European operations might report an earnings before interest, tax, depreciation, and amortisation loss of $39 per tonne due to continued losses in UK operations, which to some extent could be mitigated by a breakeven in the Dutch operations.
At a consolidated level, Tata Steel is expected to report a 3% on year decline in its EBITDA at over INR 64 billion, but this would be a 7% sequential rise, according to the average of 14 brokerages' estimates. Equirus Securities estimated the EBITDA the highest in excess of INR 66 billion, and Prabhudas Lilladher estimated it the lowest at around INR 61 billion.
On Wednesday, shares of Tata Steel closed 1.1% lower at INR 146.0 on the National Stock Exchange.
Following are the Jan-Mar earnings estimates for Tata Steel based on reports from 15 brokerages in descending order of the estimate of net profit
Brokerage firm | Net sales (in million rupees) | Net profit (in million rupees) | EBITDA (in million rupees) |
Equirus Securities Pvt Ltd | 5,58,029.00 | 16,364.00 | 66,213.00 |
JM Financial Institutional Securities Pvt Ltd | 5,27,438.00 | 14,459.00 | 64,744.00 |
ICICI Securities Ltd | 5,68,062.00 | 13,991.00 | 65,095.00 |
HDFC Securities Ltd | 5,68,330.00 | 12,900.00 | 65,540.00 |
Axis Securities Ltd | 5,44,320.00 | 12,080.00 | 62,340.00 |
Elara Securities (India) Pvt Ltd | 5,67,239.00 | 11,781.00 | 63,942.00 |
Kotak Institutional Equities | 5,77,422.00 | 11,305.00 | 65,398.00 |
Emkay Global Financial Services Ltd | 5,44,028.00 | 11,295.00 | 66,147.00 |
IDBI Capital Market Services Ltd | 5,52,736.00 | 10,839.00 | 66,148.00 |
Prabhudas Lilladher Pvt Ltd | 5,76,100.00 | 10,600.00 | 60,600.00 |
Nuvama Wealth Management Ltd | 5,34,400.00 | 9,900.00 | 65,200.00 |
Anand Rathi Share and Stock Brokers Ltd | 5,43,673.00 | 9,897.00 |
|
Motilal Oswal Financial Services Ltd | 5,60,400.00 | 6,500.00 | 64,400.00 |
Systematix Shares and Stocks (India) Ltd | 5,66,500.00 | 5,200.00 | 61,500.00 |
YES Securities (India) Ltd | 5,32,118.00 | 4,589.00 | 63,831.00 |
Average | 5,54,719.67 | 10,780.00 | 64,364.14 |
End
US$1 = INR 84.83
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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