Analysts expect the operation cost of JSW Steel to have remained under pressure in Oct-Dec 2012 as it is forced to source raw material at higher cost on the back of iron ore shortage and mining ban in Goa and Karnataka.
Analysts also expect the company to suffer from weak pricing power owing to subdued demand in Oct-Nov and this they expect to show up in its earnings for Oct-Dec 2012.
However, its overall performance during Oct-Dec 2012 may be boosted by the improved demand scenario at the end of December quarter, analysts feel.
According to some analysts, the average utilisation levels of the firm’s plants stood at around 70 percent owing to iron ore shortage, some of them also point out that despite coking coal prices declining during the quarter, it will be offset by lower volumes resulting in EBITDA decline of around 24 percent, QoQ.
Prabhudas Lilladher points out that consolidated revenue may fall 7.8 percent to Rs 8,740 crore, QoQ owing to lower realization in blended category. Profit before minority interst and share of loss or profit from associate firms is likely to fall 41 percent,QoQ to Rs 180 crore.
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