Tata Steel shares dropped over 5 percent in Thursday’s trading session after the company’s Q4 earnings report fell short of market expectations. This downturn was largely due to domestic steel prices remaining under pressure, exacerbated by increased imports of finished steel from China.
Shreyansh Shah, a Research Analyst at StoxBox, noted that although Tata Steel reported a profit, it did not meet market estimates. The performance was negatively impacted by rising coking coal prices, he explained. While the company’s revenue growth was driven by high volumes due to increased steel demand from significant infrastructure spending, higher coking coal costs and losses at its foreign subsidiaries offset these gains. The company’s expansion plans are progressing well, and we believe that after addressing the challenges faced by its western subsidiaries, Tata Steel will achieve strong financial performance in the long term, Shah added.
Yes Securities has an ‘ADD’ rating on Tata Steel, which it plans to review following the conference call scheduled for 1 pm today. Prabhudas Lilladher has suggested an ‘accumulate’ rating for the stock.
According to Yes Securities, Tata Steel’s Q4 FY24 consolidated EBITDA grew by 5 percent quarter-on-quarter to Rs 6,600 crore, exceeding their estimate of Rs 6,200 crore due to strong operating performance from the Indian operations.
“Raw material cost per ton increased by 9 percent QoQ to Rs 28,044, while other expenses declined by 14 percent QoQ to Rs 21,091 per ton, benefiting from better operating leverage and lower royalty costs despite some increases in freight and repairs,” they reported.
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Shreyansh Shah of StoxBox remarked that Tata Steel’s strategy of leveraging pan-India growth and its strong brand presence will support faster growth in the medium term within the high-margin business. “With continuous improvements in the Automotive, Infrastructure, and Construction segments, our outlook for the steelmaker remains positive,” he added.
Tata Steel shares were trading 5.20 percent lower on the BSE at Rs 165.15.
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