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http://www.icicidirect.com/mailimages/ICICIdirect_ConsolidatedResultPreview_Q4FY12E.pdf
Metals & Mining
ƒ EBITDA/tonne to improve marginally QoQ
On a QoQ basis, we expect steel companies within our coverage
universe to report an improved operational performance for Q4FY12E
on the back of an up-tick in domestic demand. After a lacklustre first half
of FY12, there has been an improvement in the demand scenario.
Domestic steel demand has increased ~5.2% during the first 11 months
of FY12 wherein demand growth in the first two months of Q4FY12 is
~8.8%. Furthermore there has been a marginal increase in steel prices
QoQ while prices of raw materials have also seen a declining trend
sequentially. As a result, for Q4FY12E, we expect EBITDA/tonne of
major steel companies to increase in the range of ~ | 96 to | 541/tonne
QoQ (for standalone operations). For Q4FY12E, we expect the
EBITDA/tonne of Tata Steel’s Indian operations to be ~| 16759/tonne (|
16218/tonne in Q3FY12) while the EBITDA/tonne of JSW Steel is
expected to be ~| 6661/tonne (| 6565/tonne in Q3FY12) and SAIL’s
EBITDA/tonne is expected to be ~ | 6187/tonne (| 6049/tonne in
Q3FY12).
ƒ Base metal prices improve sequentially QoQ but are lower YoY
Sequentially, on a QoQ basis, there has been an increase in base metal
prices on the LME. During the quarter under review, average base
metals prices were higher in the range of ~4-11% QoQ but lower ~13-
20% YoY. Quarterly average prices of aluminium during Q4FY12 were ~
US$2181/tonne, higher by 4.1% QoQ but lower by ~13.0% YoY.
Similarly, quarterly average prices of copper during the quarter under
review were at ~ US$8327/tonne, higher by 10.9% QoQ but lower by
13.6% YoY. Zinc was at ~ US$2028/tonne, higher by 6.4% QoQ but
lower 15.3% YoY and Lead was at ~ US$2092/tonne, higher by 5.0%
QoQ but lower by 19.6% YoY.
ƒ EBITDA margins to increase QoQ
In Q4FY12E, we expect the EBITDA of the I-direct coverage universe to
increase by 21.3% QoQ. EBITDA margins are also likely to increase by
270 bps QoQ to 16.3%. Some companies in our coverage universe had
one-off adjustments in Q3FY12 and Q4FY11 (below the EBITDA level).
As a result, the PAT on a YoY as well as QoQ basis is not comparable.
: Company specific view
Company Remarks
Graphite India We expect capacity utilisation of the graphite electrodes segment to be ~95% in
Q4FY12E (~91% in Q4FY11). On the back of better realisations and higher sales
volume, we expect the topline to increase ~ 41% YoY. EBITDA margins are
expected to decline by 40 bps QoQ to 19.9%
HEG We expect capacity utilisation of the graphite electrodes segment to be ~90% in
Q4FY12E (~82% in Q4FY11). On the back of better realisations and higher sales
volume, we expect the topline to increase ~ 34% YoY. However, EBITDA margins
are expected to decline 70 bps QoQ to 19.7%
Hindustan
Zinc
We expect refined zinc sales to be at ~198,000 tonnes while lead volumes are
expected to be ~34,000 tonnes. The topline is expected to increase by 12.2% QoQ.
We expect EBITDA margins to decline marginally by ~30 bps QoQ to 50.8%. PAT
is expected improve by 10% QoQ
JSW Steel The sales volume for Q4FY12E is expected to be ~1.9 MT but would remain
flattish QoQ. Topline is expected to increase ~15.8% YoY but is expected to remain
flattish QoQ. However, the EBITDA margin is expected to increase by 50 bps QoQ
~16.1%. We expect a reversal of MTM forex loss to the tune of ~| 150 crore
SAIL For Q4FY12E, we expect sales volumes to be~2.83 MT (~2.62 MT in Q3FY12 and
~3.14 MT in Q4FY11). As a result, we expect the topline to be higher by ~10.8%
QoQ. EBITDA margins are likely to remain flattish sequentially at ~14.7%. We
expect a reversal of MTM forex loss to the tune of ~| 400 crore
Sesa Goa Sales volumes for Q4FY12E are expected to be ~4.2 MT while realisation of iron
ore is expected to be ~ US$95/tonne. This would be the first quarter where there
would be the impact of higher export duty (to 30%). Also, Cairn India’s 20%
contribution to the bottomline would also be there for the full quarter
Sterlite
Industries
We expect topline to remain flat both QoQ as well as YoY. On the back of
operational efficiency, we expect the EBITDA margin to improve sequentially by
240 bps QoQ to ~25.0%. Zinc business, both international as well as domestic, is
expected to drive the bottomline
Tata Steel Consolidated sales volumes for Q3FY12E are expected to increase ~3% QoQ to
~6.07 MT. Volumes from the Indian operations are estimated to be ~1.7 MT. We
expect Tata Steel Europe to report sales volume of ~3.5 MT and adjusted positive
EBITDA/tonne of US$6/tonne
Usha Martin The topline for Q4FY12 is expected to be higher QoQ on the back of better sales
volumes and improved realisations. The EBITDA margin is expected to improve
sharply by 700 bps QoQ to 16.4% on the back of better operational efficiency
Visa Steel On a YoY basis, we expect an increase in the share of value-added products in the
overall product mix. On the back of a better product mix, we expect the EBITDA
margin to increase by 30 bps YoY to 16.4%. We expect a reversal of MTM forex
loss to the tune of ~| 30 crore
Source: Company, ICICIdirect.com Research
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