Tata Steel Q2FY25 preview: Weak pricing, high costs to weigh on earnings

Tata Steel is bracing for a mixed acceptable of Q2 results arsenic weakening alloy prices and precocious operational costs proceed to situation its home and European business, according to brokerage estimates. For Q2FY25, Tata Steel's consolidated gross is projected astatine astir Rs 52,691 crore, marking a 5 per cent driblet from past year’s Rs 55,682 crore, arsenic per Zee Business estimates. This diminution is chiefly owed to an estimated 3 per cent simplification successful realizations quarter-on-quarter, driven by softer prices successful some India and Europe.

EBITDA for the 4th is anticipated to autumn by 12-17 per cent sequentially, with estimates from 5 brokerages pegging it astatine Rs 4,819 crore. However, connected a year-on-year basis, EBITDA is expected to amusement a 13 percent emergence from Rs 4,268 crore past year, starring to a somewhat amended EBITDA borderline of 9.14 percent, up from 7.7 percent. 

European concern weighs down margins, with large write-offs expected

Tata Steel’s European operations, peculiarly successful the UK, are expected to incur losses arsenic the institution navigates higher restructuring and impairment costs. Last year, the institution had a one-time nonaccomplishment of Rs 6,899 crore, including an impairment disbursal of Rs 2,631 crore for its Port Talbot facility, restructuring costs of Rs 2,425 crore, and an further Rs 1,187 crore allocated to the British Steel pension scheme. These exceptional items are apt to interaction the wide results this 4th arsenic well, with Tata Steel’s UK operations remaining nether unit amid dilatory request betterment and accrued costs.

Profit aft taxation (PAT) for Tata Steel is projected astatine Rs 890 crore, a 27 per cent betterment from Rs 703 crore (adjusted) successful the erstwhile year. While the company’s borderline gains bespeak immoderate operational resilience, continued weakness successful the European conception whitethorn temper wide profitability for the quarter.