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Metal sector may report better results owing to surge in prices
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
In terms of the fourth quarter of 2018, the ferrous stocks may report a better-than-expected quarter owing to the sharp price increase, while from non-ferrous space, Nalco is likely to deliver strong results owing to the surge in alumina prices. From the FERROUS pack: Sales Volumes from Jindal Steel and Power Limited (JSPL) and Steel Authority …
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In terms of the fourth quarter of 2018, the ferrous stocks may report a better-than-expected quarter owing to the sharp price increase, while from non-ferrous space, Nalco is likely to deliver strong results owing to the surge in alumina prices.
From the FERROUS pack:
Sales Volumes from Jindal Steel and Power Limited (JSPL) and Steel Authority of India Limited (SAIL) will be strong, Citi Research said in a client note.
JSPL in March 2018 has posted its highest ever monthly crude steel production followed by the ramp up of its Angul unit in Odisha.
Tata Steel’s volumes were impacted due to the repairs undertaken in a blast furnace at the Kalinganagar plant in Odisha.
Brokerages expect a strong surge in EBITDA per tonne for ferrous players:
Morgan Stanley said there was a surge in prices in the fourth quarter factoring in a rate hike of Rs 4,500 per tonne for flat products and about Rs 5,500 per tonne for long products from end of Dec 2017 to end of Mar 2018.
Citi expects a sharp surge in EBITDA per tonne across the sector.
Besides strong expansion in EBITDA per tonne, Street is awaiting a fine-print on stress steel asset sales like Tata Steel’s bid for Bhushan Steel.
The NON-FERROUS space
Hindalco’s standalone revenue is expected to improve marginally with improved aluminium & copper realizations but this will be partly offset by lower copper volumes.
EBITDA could get impacted by the higher input costs in the aluminium segment. However, profit after tax (PAT) will get cushioned due to lower interest costs.
Nalco could be the star as its results will be driven by the sharply higher profitability of alumina segment.
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