Metals, Mining Q1 Review- Weak Results On Account Of Lower Sales Volume, Drop In Metal Prices: Axis Securities

Axis Securities Report

Financial Performance

For aluminium companies under coverage:

Nalco’s revenue/Ebitda/profit after tax missed our estimates and dropped by 16%/32%/40% YoY and by 13%/22%/33% QoQ led by a drop in the average London Metal Exchange aluminium prices which declined by 22%/5% YoY/QoQ in Q1 FY24 and lower-than-expected alumina sales. 

Hindalco Industries Ltd.’s revenue/Ebitda/profit after tax dropped by -9%/-27%/-40% YoY and de-grew/grew by -5%/-2%/+2% QoQ led by a drop in the average LME aluminium prices. LME aluminium prices declined by 22%/5% YoY/QoQ in Q1 FY24, which were partially offset by higher-than-expected metal shipments (Copper and Aluminium shipments beat our estimates) which led to beat on our estimates.

For steel companies under our coverage:

Ebitda for both Steel Authority of India Ltd. and Tata Steel Ltd. declined by 28%/44% and 65%/28% YoY/QoQ respectively, led by lower sales volume in the quarter and drop in hot rolled coil prices (down 15% YoY/ 1% QoQ). SAIL’s Ebitda drop was in line with our expectation. At Tata Steel, better-than-expected Ebitda at Indian operations led to beat against our estimates.

For Coal India: Revenue grew by 3% YoY led by higher sales volume, which was partially offset by lower average selling price on account of lower e-auction prices. Ebitda/profit after tax declined by 14%/10% YoY respectively led by higher employee costs. On a QoQ basis, revenue declined by 6% as sales volume remained flat QoQ but ASP declined by 6% on account of lower e-auction prices. Ebitda was not comparable as the company took provision towards employee expenses in Q4 FY23.

For APL Apollo Tubes Ltd.: Revenue grew by 32%/3% YoY/QoQ but missed ours and consensus estimates by 2% led by lower-than expected sales realization. Ebitda was up 58% YoY but declined by 5% QoQ, missing our and consensus estimates due to QoQ decline in Ebitda/tonne across value added product and general products.

For JTL Industries Ltd.: Revenue/Ebitda/profit after tax grew by 37%/131%/110% YoY led by 52% increase in sales volume. On a QoQ basis, revenue stood in line with our estimates but Ebitda/profit after tax missed our estimates and de-grew by 33%/31% led by inventory loss on account of fall in secondary steel prices.

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