Arcelor Mittal’s Essar steel buy may not severely hit other players

摘要

Arcelor Mittal’s entry through its acquisition of Essar Steel is likely to intensify competition in the domestic steel sector but there is still headroom for steel players to increase capacities with consumption demand tipped to grow at 6% to 7% a year in the long term, India Ratings and Research (Ind-Ra) has said in a recent report. The agency has a stable to negative outlook on the sector with an expectation of higher net leverage in FY20, reduced EBITDA (earnings before interest tax depreciation and amortisation) margins due to lower realisation and higher input costs being faced by domestic players. The second half of the year (H2FY20) is likely to be better than first half (H1FY20) with a recovery in realisations and a simultaneous reduction in raw material prices, mainly those of coking coal, the report said.