Domestic steel demand continues to remain weak resulting in lower off-take, stated Reliance Securities in its report.
Further, while safeguard duty of 20% was imposed during the quarter, realizations are expected to remain flat sequentially due to continued cheap imports. Spreads however could improve as raw material prices continue to head South, it added.
However, the broking firm anticipates steel demand to grow by ~6% in FY16E on the back of higher infrastructure spending. On the non-ferrous front too, LME prices have weakened further despite already falling considerably. ''The depreciating rupee is the only saving grace.''
''Our Metals & Mining universe reported a revenue growth of 1% quarter-on-quarter (qoq), but declined 11% yoy, due to a fall in revenues across ferrous as well as non-ferrous companies barring HZL and Hindalco, which benefited from growth in volumes. Ferrous companies reported a decline in revenues due to subdued volumes and realization.
It must be noted that the July-September quarter is the weakest quarter in a fiscal. HZL reported the highest revenue growth of 6% yoy due to recovery in mined metal production, followed by Hindalco on the back of ramp up of new facilities.
SAIL, JSW Steel, NALCO and MOIL reported a decline of 21%, 19%, 9% and 40% in revenues on a yoy basis, due to subdued demand and fall in NSR. Overall the quarter was a weak one for both non-ferrous as well as ferrous for the companies under our coverage,'' the stock broker said.