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Kolkata, Nov. 18 Tata Steel stock slid around one per cent on Tuesday though the company announced that September quarter results of Corus would be consolidated and taken on record on November 28.

Corus, which had announced 20 per cent production cut for the October-December quarter, has now decided to extend the trimming of output beyond December. The second largest steel maker in Europe expected a crude steel production slash of 30 per cent than planned during the six-month period to the end of March 2009.

This meant that in the January-March 2009 quarter, it would reduce crude steel production at a higher rate than envisaged for the current quarter.

Corus will temporarily idle one blast furnace at each of its Scunthorpe, IJmuiden and Port Talbot works and will also adjust output levels on its downstream production units to suit market conditions in their respective regions and end-use sectors.

According to analysts, though this would reduce costs to an extent, it would also be read as negative income guidance before the September quarter results.

Broking houses have already trimmed Tata Steel EPS estimates for the current financial year to March 31, 2008.

Motila Oswal believed average blended realisation for steel in the domestic market would decline Rs 6,000 a tonne QoQ in 3QFY09 and further by Rs 4,000 a tonne in 4QFY09. It felt steel prices should stabilise between January and March 2009. However, margins would be squeezed in 3QFY09 and 4QFY09.

However, Mr Arun Kejriwal of KRIS felt that Tata Steel prices were hammered so much that the estimated FY09 price-earning ratio has come down below one. September quarter results of Corus may now throw up positive surprise, rather than a negative one.

More Stories on : Announcements | Stocks | Steel | Tata Steel Ltd

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