Near-term margin pressure may prevail for Tata Steel

Profitability may remain subdued in December quarter, even as some benefit accrues on account of softness in raw material prices

Weak demand and soft prices across geographies impacted Tata Steel’s consolidated performance for the September quarter (Q2). Though some softness was anticipated, weaker-than-expected performance of its subsidiaries and the company’s operating profit falling to multi-quarter lows meant that Q2 numbers fell short of Street estimates.
 
Adjusted for one-offs, Tata Steel’s earnings before interest, tax, depreciation, and amortisation at Rs 4,018 crore came lower than Bloomberg consensus estimates of Rs 4,309 crore, and so did its pre-tax and net profits. Worse, the near-term outlook also remains subdued.
 
The average domestic price of flat steel, which is used in automobiles