Tata Steel: Pretax profits jump 143% - Views on News from Equitymaster

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Tata Steel: Pretax profits jump 143%

Jan 16, 2001

Tata Steel has reported a 13% drop in net profits for the quarter ended 31st December, 2000. However, on excluding the impact of extra ordinary items on profits, the company has reported a sharp rise in profitability. This is in line with the company’s performance in earlier quarters.

(Rs m) 3QFY00 3QFY01 Change
Sales 16,989 18,682 10.0%
Other Income 22 36 62.3%
Expenditure 14,275 14,501 1.6%
Operating Profit (EBDIT) 2,715 4,181 54.0%
Operating Profit Margin (%) 16.0% 22.4%  
Interest (Net) 860 993 15.4%
Depreciation 1,083 1,291 19.2%
Profit before Tax 795 1,934 143.3%
Other Adjustments 857 (527)  
Tax 190 130 -31.6%
Profit after Tax/(Loss) 1,462 1,277 -12.6%
Net profit margin (%) 3.6% 9.7%  
No. of Shares (eoy) 368.4 368.4  
Diluted Earnings per share#* 15.87 13.86 -12.6%
*(annualised)      

The interest and depreciation has however continued to register a growth. This is largely due to the commissioning and subsequent ramping up of operations at its new cold rolling mill. This facility is anticipated to benefit the company in terms of better realisations in coming quarters.

Tisco has benefited largely from a rise in operating margins. This has been made possible by firm prices and declining costs. However, on a quarter on quarter basis, the company has seen its OPM fall by 0.5%. This could be due to the recent sluggishness in some key international markets. In the coming quarters the company could be faced with more pressure as it faces an increasingly hostile export market (the US has recently imposed anti dumping duties) and as competition in the domestic market intensifies.

The stock is presetly trading at Rs 132, implying a P/e muliple of 9.5x.


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