Tata Steel - Headed in the right direction - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Tata Steel - Headed in the right direction

May 19, 2000

Tata Steel, one of the representatives of India's venture into heavy industries earlier this century, is attempting to make an entry in the record books. It is aiming to become the lowest cost producer of steel in the world. And it may be already within striking distance. Tata Steel is India’s largest integrated steel producer. In recent years it has suffered due its very large employee base, which contributed in part to high costs of production. Another factor that hurt the company was the low value added nature of its output. Finally, with the company nearing its capacity, concerns about future growth dampened sentiment pertaining to the stock.

Over the last couple of years, however, the company seems to have undergone a significant change. Its employee base is declined 34% between FY93 and FY00. Productivity on the other hand (in terms of tonnes/man year) has jumped 104% to 161 in FY00 as compared to 79 in FY95. The company has also taken measures to improve its product mix. Finished steel now accounts for 85% of its output as compared to 80% in FY98. This ratio is further expected to jump to 90% in FY02, when its cold roll mill (high value output) is running at full capacity. Tisco has also stated that it is actively looking at acquiring capacities to generate growth (taking care of the last concern).

Production costs per tonne of HR coil declined significantly to US$ 172 as compared to US$ 154 at POSCO, the best in its class. Infact during the last quarter production costs were as low as US$ 157! The company’s cost control measures have already begun to reflect on the bottomline. Profit after tax jumped 50% in FY00 on the back of a 3% rise in operating margins. Read Interview with Mr. Ishaat Hussain, Executive Director, Tata Sons

The Tisco stocks trades at a P/E multiple of 10. The valuation is significantly lower as compared to that recorded in previous years (FY97 - 18.3, FY98 - 19.6, FY99 - 16.2). With the tech fever on the wane, maybe the stock will once again catch the face of investors.

Equitymaster requests your view! Post a comment on "Tata Steel - Headed in the right direction". Click here!

  

More Views on News

Do Metal Stocks Really Track Metal Prices? (Views On News)

Sep 11, 2021

A close look at the performance of base metals and key companies in that sector.

A Peek into Tata Steel's Stellar June Quarter Performance (Views On News)

Aug 13, 2021

Tata Steel's June quarter profits were higher than the full-year profits reported for fiscal 2021.

TATA STEEL 2020-21 Annual Report Analysis (Annual Result Update)

Jul 8, 2021 | Updated on Jul 8, 2021

Here's an analysis of the annual report of TATA STEEL for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of TATA STEEL. Also includes updates on the valuation of TATA STEEL.

Tata Metaliks Share Price Jumps 8% After Turning Profitable (Views On News)

Jul 14, 2021

A peek into Tata Metaliks' stellar June quarter performance.

Shyam Metalics IPO: Key Points to Consider (Views On News)

Jun 12, 2021

Shyam Metalics is commanding a strong grey market premium ahead of its IPO next week.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

5 Indian Companies Embracing Blockchain Technology (Views On News)

Nov 23, 2021

Blockchain adoption in India was slow in the past. Now, the technology is being well received.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

TATA STEEL SHARE PRICE


Dec 3, 2021 (Close)

TRACK TATA STEEL

  • Track your investment in TATA STEEL with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

TATA STEEL - GOPAL IRON & STL. COMPARISON

COMPARE TATA STEEL WITH

MARKET STATS