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TISCO: Global slowdown takes toll - Views on News from Equitymaster
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  • May 31, 2002

    TISCO: Global slowdown takes toll

    Tata Steel has reported a sharp drop in net profits for the year ended March 2002. The main reason for the decline has been the sharp decline in sales towards the end of the year. This is clearly evident from the last quarter results.

    (Rs m) 4QFY01 4QFY02 Change FY01 FY02 Change
    Net Sales 20,854 19,219 -7.8% 68,386 67,079 -1.9%
    Other Income 108 309 186.2% 506 856 69.2%
    Expenditure 15,735 15,597 -0.9% 51,321 54,367 5.9%
    Operating Profit (EBDIT) 5,119 3,622 -29.2% 17,065 12,712 -25.5%
    Operating Profit Margin (%) 24.5% 18.8%   25.0% 19.0%  
    Net Interest 1,074 633 -41.1% 3,766 3,698 -1.8%
    Depreciation 1,371 1,219 -11.1% 4,923 5,248 6.6%
    Profit before Tax 2,782 2,079 -25.3% 8,883 4,623 -48.0%
    Extraordinary items (510) (498)   (2,858) (2,113)  
    Tax (180) (356) 97.6% (490) (461) -5.9%
    Profit after Tax/(Loss) 2,092 1,225 -41.5% 5,534 2,049 -63.0%
    Net profit margin (%) 10.0% 6.4%   8.1% 3.1%  
    No. of Shares 368.4 368.4   368.4 368.4  
    Diluted Earnings per share* 22.7 13.3   15.0 5.6  
    P/E Ratio   22.9     19.0  
    (* annualised)            

    The steel sector, until recently, has been witnessing trying times over the last couple of months due to the global slowdown. To make matters worse several countries have imposed anti dumping duties. This has limited export opportunities for domestic steel companies. However, off late there has been a spurt in steel prices on the back of a pick up in economic activity. Tata Steel however has limited the impact by focusing on cost cutting and improving its product mix. According to the company's management, the performance compares very well against its global peers.

    In the coming months the company is likely to benefit from the recent firming up of prices and a further improvement in product mix. However, whether the global economy will actually turnaround in the second half of the year is still uncertain and any adverse development could have a significant impact on the company's performance.

    The stock presently trades at Rs 107, implying a price to earnings ratio of 19x on full year FY02 earnings.



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    Aug 18, 2017 (Close)


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