Earnings Today: Tata Steel May Return To Black In April-June Quarter

Tata Steel Ltd. is expected to return to the black in the April-June quarter on account of strong operating performance and income from sale of its investments in Tata Motors.

The steel major is likely to report a profit of Rs 1,142 crore against a loss of Rs 3,183 crore in the same quarter last year, according to Bloomberg consensus estimates. The surge is bottomline will be aided by an income of Rs 3,700 crore from the sale of 8.3 Tata Motors shares this quarter.

Revenue on consolidated basis is expected to grow 13 percent to Rs 28,468 crore on a year-on-year basis on healthy sales volumes, according to a report by ICICI Securities. The company reported a provisional volume growth of 28 percent year on year due to ramp-up at its Kalinganagar plant, Tata Steel said in a press release earlier.

Operating performance is likely to be strong with earnings before interest, tax, depreciation and amortisation (EBITDA) rising an estimated 32 percent to Rs 4,267 crore compared to the same quarter last year, according to the consensus estimate of analysts tracked by Bloomberg. EBITDA margin may expand to 15 percent from 12.8 percent in the same period.

However, after the exceptionally strong quarter, Tata Steel's EBITDA per tonne may moderate, both for the domestic and European businesses, due to softer steel prices coupled with more expensive coking coal, Credit Suisse said in a recent report. The brokerage house pegs EBITDA per tonne for the domestic business at Rs 12,000 and that of the European business at $62 against $100 in the previous quarter and $51 in the corresponding quarter last year.