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Print[Ferro-Alloys.com] In an echo of the trend in stocks in the last few months, the earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of Indian domestic steel companies is seen up year-on-year in October-December, mainly on higher realisations, brokerages said.
“Ferrous companies are likely to report a 56 per cent year-on-year and seven per cent quarter-on-quarter Ebitda margin jump because of strong realisations and lower costs, particularly of coking coal,” Nirmal Bang Institutional Equities said in a note.
The steel sector is price-driven. Multiple price rises in three months will lead to better margins, said an analyst at a local brokerage. “Volumes haven't picked up mainly because of weak demand.”
Volume pick-up remained lacklustre also due to an extended monsoon and logistical challenges, brokerages said.
Quarter-on-quarter, too, most producers are expected to report flat volumes while margins are expected be higher, said Motilal Oswal in its report.
“Prices showed an improvement in North America and Europe in October-December, increasing three per cent and two per cent quarter-on-quarter, respectively, on demand expectations.”
Prices of ore and coking coal were mostly unchanged. Quarter-on-quarter, ore price increased a per cent to $136 a tonne, while coking coal’s declined one per cent to $141 a tonne.
In India, steel prices increased due to rises taken to cover higher costs, said brokerages.
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