InvestorQ : How do you see the operating margins of steel companies in India in FY21?
manisha Kolvenkar made post

How do you see the operating margins of steel companies in India in FY21?

Answer
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Mahima Roy answered.
3 months ago


The operating margins of large steel manufacturers like Tata Steel, JSW Steel and SAIL are likely to take a hit in FY21. This is evident from early signals emanating from the sector. Rating agency CRISIL has projected that the OPMs of steel companies may take a 200 bps hit down to 15% on account of weaker top line sales volume and tepid realizations.

There could be some respite for steel companies from lower raw material prices. Steel companies are heavy betting on a revival in demand in the second half of FY21 due to pent-up demand and aggressive government spending on construction and infrastructure. Credit profiles are unlikely to be impacted as capital investments have been mostly put off.