Wednesday, October 7, 2009

Strong Steel Sales Boosts Tata Steel

. Wednesday, October 7, 2009

By stockOzone team

Tata Steel rose 2.80% to Rs 524.70 at 11:38 IST after the company said steel sales from its Indian operations rose 19% to 1.46 million tonnes in Q2 September 2009 over Q2 September 2008.

The announcement was made during trading hours today, 7 October 2009.

Meanwhile, the BSE Sensex was up 121.36 points, or 0.72%, to 17079.90.

On BSE, 8.66 lakh shares were traded in the counter as against an average daily volume of 37.54 lakh shares in the past one quarter.

The stock hit a high of Rs 525 and a low of Rs 516 so far during the day. The stock had hit a 52-week high of Rs 545 on 17 September 2009 and a 52-week low of Rs 146.35 on 26 November 2008.

The stock had outperformed the market over the past one month till 6 October 2009, rising 18.66% as compared to the Sensex 8.09% rise. It outperformed the market in past one quarter, jumping 28.74% as against 20.76% rise in the Sensex.

The world's sixth largest steel maker by capacity has an equity capital of Rs 887.21 crore. Face value per share is Rs 10.

The current price of Rs 524.70 discounts the company's Q1 June 2009 annualised EPS of Rs 43.23, by a PE multiple of 12.13.

Steel sales rose 21% to 2.88 million tonnes in April-September 2009 over April-September 2008. Sales of long products, used in construction, jumped 49% in the same period.

The Indian operations account for about a quarter of the group's total annual global capacity of 30 million tonnes, which includes unit Corus, Europe's second-largest steelmaker.

Domestic steel makers had raised prices of flat steel products such as plates and sheets, mainly used in manufacturing automobiles, refrigerators and washing machines, by about 3-5% from 1 September 2009, in line with international prices.

Tata Steel had raised prices of flat products by Rs 1,500 a tonne. Prices of long steel products used in construction and infrastructure sector, however, were left unchanged.

Tata Steel reported a net loss of Rs 2208.68 crore in Q1 June 2009 on a consolidated basis as against a net profit of Rs 3900.90 crore in Q1 June 2008. Consolidated net sales declined 46.6% to Rs 23180.51 crore in Q1 June 2009 over Q1 June 2008.

The performance was hit by lower demand and a sudden termination of off-take agreements by four companies from its Teesside steel plant in the UK.

On a standalone basis, Tata Steel's net profit fell 46.9% to Rs 789.83 crore on 8.8% fall in net sales to Rs 5554.02 crore in Q1 June 2009 over Q1 June 2008.

Tata Steel is an integrated steel producer, which manufactures a variety of steel products. The company's products include steel ball bearing rings, alloy steel bearing rings, annular forgings, flanges, bearings, welded steel tubes, cold rolled strips and seamless tubes. Tata Steel also manufactures metallurgical machinery.

Promoters have pledged 9.89 crore shares or 13.54% stake of Tata Steel. Total promoter shareholding in Tata Steel is 33.95% (as on 30 June 2009).

Disclosure: Author does not own any of the stocks discussed here.

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