A near six-fold increase in the net profit of Tata Steel Long Products Ltd, the first steel company to announce its quarterly results, may signal how the company’s parent Tata Steel and the other integrated players may fare in this results season.

TSLPL, formerly Tata Sponge, posted a profit of Rs 304.39 crore in the third quarter compared with Rs 59.05 crore in the preceding quarter and Rs 112.90-crore loss in the same period last fiscal.

The stock closed at a fresh 52-week high of Rs 859.85, up 20 per cent, or Rs 143.30.

Shares of Tata Metaliks, which will be merged with TSLPL, also rose 20 per cent to close at Rs 866.15.

Odisha-based TSLPL is a subsidiary of Tata Steel Ltd, which holds a 74.91 per cent stake in the company. Experts say steel companies are expected to post better results in the third quarter than the second, backed by record prices of the alloy.

“Integrated players such as Tata Steel and Steel Authority of India will benefit the most from the record prices as they procure iron ore at production cost. Those who buy iron ore from the market will also benefit as the extent of the rise in steel prices has been higher than that of iron ore cost per tonne of steel, adding to the spread in the EBIDTA margin,” said Jayanta Roy, senior vice-president and group head of corporate sector ratings at Icra.

Benchmark hot-rolled coil (HRC) steel prices have rallied from the low of Rs 35,000 tonnes in July to Rs 50,000 tonnes by the end of December, an increase of Rs 15,000 per tonne. During the same period, NMDC raised iron ore (65.5 per cent ferrous content) prices from Rs 2,450 per tonne to Rs 5,200 per tonne by the middle of December, a hike by Rs 2,750 per tonne.

Given that 1.7 tonnes of iron ore is required to produce a tonne of steel, the spread between the two has only gone up in the last six months. Moreover, prices of coking coal — the other crucial raw material — has remained benign during this period.

Icra says the next fiscal would also be good for the ferrous players. The previous upcycle in the domestic steel industry lasted for only three quarters, beginning in Q4 of FY2018 and fizzling out during Q3 FY2019.

“This time around, we believe that the upcycle could be more durable than the previous one, with the recovery being more broad-based across primary and secondary steelmakers and being led by a combination of both domestic and international factors,” Roy added. Benchmark steel prices have now reached Rs 58,000 a tonne.