Tata Steel shares fall ahead of Q2 earnings, here's what to expect

Shares of Tata Steel were among the top Sensex losers amid a market rally in early trade today. The Tata Steel stock was trading 0.64 per cent lower at Rs 100.90 against the previous close of Rs 101.55 on BSE. Meanwhile, Sensex zoomed 550 points to 60,509 and Nifty gained 169 points to 17,955 in early trade.

Shares of Tata Steel are trading higher than the 5 day moving averages but lower than 20 day, 50 day, 100 day and 200 day moving averages. The Tata Group stock has been falling for the last 2 sessions. The stock is trading higher than the 20 day and 100 day moving averages but lower than 5 day, 50 day and 200 day moving averages. The large cap stock has lost 23.29 per cent in a year and fallen 9.13 per cent in 2022.

Shares of Tata Steel have declined 27.14 per cent from their 52-week high of Rs 138.63 hit on October 6, 2022. Market cap of the Tata Group firm fell to Rs 1.23 lakh crore on BSE. Total 4.79 lakh shares of the firm changed hand amounting to a turnover of Rs 4.84 crore.

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Tata Steel is expected to report a weak set of earnings in Q2. Elara Securities sees a 87.7 per cent YoY fall in profit at Rs 1,416.70 crore on a 3.5 per cent drop in sales at Rs 57,877.80 crore. ICICI Securities expects the firm to report a 85.6 percent fall in profit to Rs 17,118 crore due to a 3.3 percent decline in sales at Rs 58,397 crore. Edelweiss Securities sees Tata Steel profit falling 79.1 per cent YoY to Rs 1,630 crore. This brokerage sees sales figure at 57,250.80 crore.

Motilal Oswal expects Tata Steel to clock a 84.6 per cent YoY drop in net profit at Rs 1,757.70 crore on a 3.9 per cent YoY rise in sales at Rs 62,770.80 crore. The management guidance on Europe operations and the impact depreciating British pound (against dollar) will be keenly watched and will impact the movement of stock going ahead.

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The Tata Group firm logged a 21 per cent fall in its consolidated net profit in the first quarter of the current financial year. The steel major logged a consolidated net profit of Rs 7,714 crore for the quarter ended June 30, 2022 against Rs 9,768 crore in the corresponding quarter of FY22.

According to analysts, steel stocks are likely to remain under pressure due to the global slowdown and delays in infrastructure activities such as road and highway construction, which may put additional pressure on prices in the coming quarters.

On the outlook of  the Indian steel companies, Siddharth Oberoi, founder, Prudent Equity said, "The Indian steel producers have seen a fall in earnings due to decreased realisation, rising input costs, and low production and demand in the market. Companies that rely on export markets were hit hard by falling steel prices around the world."

Recently, JSW Steel reported a weak set of earnings in the second quarter.

Sajjan Jindal-led JSW Steel reported a 112.74 per cent year-on-year fall in consolidated net profit after tax to a loss of Rs 853 crore in the September quarter led by a sharp fall in steel prices. Net profit came in at Rs 7,179 crore in the year-ago period.

Revenue rose 28.54 per cent to  Rs 41,778 crore in Q2 as against Rs 32,503 crore in the corresponding quarter last year. Total expenses climbed 78.7 per cent to  Rs 43,354 crore compared to Rs 24,261 crore earlier.