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ICICI Securities Report
Q1 FY24E is likely to be one of the atypical quarters with prior period inventory, product mix and contract prices resulting in differentiated performance of the companies under our coverage. Key points:
Shipments of all major ferrous players are likely to be up YoY, tracking steel consumption growth;
coking coal cost is likely to be higher by $6-20/tonne;
realisation for ferrous companies may be lower by Rs 1,500-2,000/tonne QoQ, except Tata Steel Ltd.;
prior period inventory of thermal coal may impact Hindalco Industries Ltd., while National Aluminium Company Ltd. is likely to benefit from the commencement of Utkal D operations; and
Jindal Stainless Ltd. may stand out with stable shipments QoQ and Ebitda/tonne sustaining above Rs 20,000/tonne.
Going ahead, we expect profitability to improve for ferrous players owing to lower coking coal cost, offsetting the impact of lower realisation.
Additionally, in case of non-ferrous players, we expect global surplus in key commodities- copper, zinc and aluminium and hence, expect prices to stay rangebound.
Over and above, we continue to monitor demand pick up in China, which is key for stock performance.
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