Ind-Ra maintains stable outlook for H2FY22 on domestic steel sector

Higher coking coal prices could moderate per-tonne EBITDA margins, but absolute EBITDA is likely to be adequately compensated by robust sales volumes and elevated price levels

India Ratings and Research (Ind-Ra) has maintained a stable outlook on the domestic steel sector for 2HFY22.

Higher coking coal prices are likely to moderate the per tonne earnings before interest, taxes, depreciation and amortisation (EBITDA) margins over 2HFY22, although keeping it elevated from FY21 levels (unless the extremely high coking coal prices of end-September 2021 continue which is unlikely), due to softening of iron ore prices amid somewhat stable steel prices.

However, the absolute EBITDA is likely to be adequately compensated by robust sales volumes and elevated price levels.

Coking coal prices increased by 150 per cent year-on-year in mid-September 2021 and