Q1FY23 Preview: Tata Steel: Revenue seen at Rs620 billion, PAT at Rs70 billion

23 Jul 2022 , 05:37 PM

Result date: 25^th July, 2022
Recommendation: Reduce
Target price: Rs952
Source: IIFL Research

Weakness in domestic business is likely to pull down Tata Steel’s performance during the June 2022 quarter. Standalone volume is expected to shrink sharply by ~20% sequentially. Realizations are expected to rise in mid-single digits over the March 2022 quarter.

Sharp surge in input costs (coking coal) would weigh heavily on the EBITDA which could decline significantly. This will be offset partially by strong EBITDA performance of Tata Steel Europe (likely to grow in mid-single digit sequentially).

Overall, consolidated Profit After Tax or PAT could decline 23.4% on a year-on-year basis and 30.6% sequentially.

Important management insights to watch out for:

• Outlook on coking coal costs going forward, export mix, and automotive contracts
• Commentary on debt
• Details on a revival of NINL
• Timelines for the commissioning of the Kalinganagar expansion program

Rs. Billion	June 2022 estimates	YoY change	QoQ change
Revenue	620	16.0%	(10.6)%
EBITDA	122	(24.2)%	(18.7)%
Profit After Tax	70	(23.4)%	(30.6)%

Source: Brokerage reports