What To Expect From Metal And Mining Firms’ Earnings 

Profit of eight metal and mining companies’ may rise by 50 percent in the three months ended September over the previous quarter, helped by higher realisations . This shall be driven by higher prices of metal.

Steelmakers may gain from lower fuel costs. Revenue and profit for miners and aluminium producers are expected to rise as base metal prices rose over the year-ago period and also sequentially.

Ferrous

Steelmakers JSW Steel Ltd., Jindal Steel and Power Ltd., Steel Authority of India Ltd. and Tata Steel Ltd.

• Most steelmakers are expected to report a flattish decline in volumes. However, Tata Steel’s volumes are likely to grow 19 percent year-on-year, driven by a ramp-up at its Kalinganagar plant in Odisha.
• Operating income for every tonne of output is expected to improve due to lower pet-coke and coking coal prices during the quarter.

Non-Ferrous

Hindalco Ltd., National Aluminium Company Ltd. and Vedanta Ltd.

• Higher caustic soda and coal costs could weigh on aluminium makers’ earnings despite a 10 percent increase in prices over the previous quarter.

Miners

Coal India Ltd., Hindustan Zinc Ltd. and NMDC Ltd.

• Realisation from fuel supply agreements is expected to decline 3 percent year-on-year due to mine downgrades in the year to March. It may, however, improve over the previous quarter.
• Coal India’s EBITDA/tonne is expected to grow by 128 percent year-on-year.
• Higher cost of production is expected to eat into profitability of Hindustan Zinc. Its profit is expected to rise 21 percent over the year-ago period and 22 percent sequentially.
• Higher iron ore realisations expected to aid revenue growth for NMDC Ltd.

(Earnings expectations compiled from reports by Morgan Stanley, ICICI Securities and Citi)