Tata Steel slips over 1.5% ahead of Q1 numbers; here's what to expect

Tata Steel Q1 preview: Shares of Tata Steel slipped as much as 1.54 per cent to hit a low of Rs 114.85 apiece on the BSE on Monday ahead of its June quarter numbers (Q1FY24), due later in the day. At the time of filing this news, the stock was trading at Rs 115, down 1.41 per cent on the BSE. 

Analysts at ICICI Securities note in the Q1FY24 preview report that ferrous players look better placed than non-ferrous players considering the improving spot spreads and better traction in the domestic market.

Ferrous metals include steel, cast iron, as well as alloys of iron with other metals (such as with stainless steel).

"We still see pressure on non-ferrous stocks owing to market surpluses in all key commodities due to subdued global demand. We would keep a close watch on domestic demand and management commentary, particularly on realisation and coking coal cost trajectory. We maintain JSPL (TP: Rs 750; BUY), Jindal Stainless (TP: Rs 390 BUY) and Tata Steel (TP: Rs 125; BUY) as our key picks in the space," the report added. 

Tata Steel Q1 preview

ICICI Securities expects standalone realisation to increase by Rs 500/te on benefits from contracts. Coking coal costs are expected to rise by US$15–20/ te. "Tata Steel's performance has been impacted by lower fixed-cost absorption. Expect a tax impact of Rs 16 billion (non-cash) as a result of the remainder portion of BSPS being bought in by Legal & General."

BSPS stands for British Steel Pension Scheme. The BSPS is an independent fund with a team managed by its own board of Trustees, separate from Tata Steel UK. Earlier in 2022, the Trustee appointed Legal & General Investment Management (LGIM) to manage the combined assets of the Scheme, bringing additional skills and expertise as the scheme approaches full buy-in.

On a consolidated basis, Tata Steel is expected to report revenue of Rs 57,831.4 crore, down 8.8 per cent year-on-year (YoY) and 8.1 per cent on a sequential basis. Earnings before interest, tax, depreciation, and amortisation (EBITDA) are expected to fall 69.2 per cent YoY to Rs 4604.5 crore. On a QoQ basis, it is seen declining by 36.2 per cent. It is expected to report a loss of Rs 1,031.6 crore. 

Tata Steel's share price

The company's stock has risen 7.17 per cent in the three-month period (April-June, 2023).