Tata Steel: A peep into past - I - 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: A peep into past - I

Jun 17, 2008

In the last two articles, we have seen the performance of SAIL during the two phases of steel cycle i.e. from year 1999 to 2003 which was a cyclical downturn and 2003 to 2007 which witnessed an upturn. Now in the next two articles, let us see the performance of its peer, Tata steel that was the largest steel producer in the domestic market after SAIL. Let us have a look at the financial performance of Tata steel between years 1999 and 2003. The revenues of the company during this period grew at a CAGR of 11.9% compared to SAIL, which grew at a CAGR of 6% only. This significant growth rate achieved during low phase can be attributed to the broad product portfolio of the company. The volume and realizations of saleable steel grew at a CAGR of 11.9% and 6.2% respectively. The realisations from saleable steel showed an upward trend in all years except in FY02 where it declined by 6.9% YoY basis. This decline was result of lower steel prices, which was caused due to overcapacity and rising protectionism overseas.

The operating profits of the company grew at a CAGR of 31.9% in the period under consideration. The operating profits also showed a rising trend in all years except in FY02 where it declined by 21.3% YoY basis, which was the result of lower realisations in that year. The company was able to achieve growth in operating profits in the low phase also due to its operational efficiency. The company managed to reduce its operating expenses from Rs.21,898 per tonne in FY99 to Rs.18,794 in FY03, a point-to-point decline of 14%.

The net profits of the company grew at a CAGR of 37.6% for the period under consideration. It also showed a rising trend in all years except in FY02, where it declined by 63% YoY basis. The interest coverage ratio of the company increased significantly from 1.8 in FY99 to 5.7 in FY03 as the company reduced its debt, which helped in the improvement of bottom line. The company registered a significant increase in net profit in FY03 of close to 400% on a YoY basis on account of rising steel prices, higher realizations and upturn in the steel demand.

As seen from the above analysis, a ruthless focus on cost efficiency and conservatism on the debt front has enabled the company to register decent performance even during a downturn. These are the very qualities that separate an average company from a good one, more so in commodity and capital intensive industries like steel. We will take a look at the company’s performance during the upturn and consider another four-year period between 2003 and 2007 in the next article.


Equitymaster requests your view! Post a comment on "Tata Steel: A peep into past - I". Click here!

  

More Views on News

TATA STEEL 2019-20 Annual Report Analysis (Annual Result Update)

Aug 7, 2020 | Updated on Aug 7, 2020

Here's an analysis of the annual report of TATA STEEL for 2019-20. 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 STEEL 2018-19 Annual Report Analysis (Annual Result Update)

Sep 9, 2019 | Updated on Sep 9, 2019

Here's an analysis of the annual report of TATA STEEL for 2018-19. 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 STEEL Announces Quarterly Results (1QFY20); Net Profit Down 66.7% (Quarterly Result Update)

Aug 8, 2019 | Updated on Aug 8, 2019

For the quarter ended June 2019, TATA STEEL has posted a net profit of Rs 6 bn (down 66.7% YoY). Sales on the other hand came in at Rs 359 bn (down 5.0% YoY). Read on for a complete analysis of TATA STEEL's quarterly results.

TATA STEEL Announces Quarterly Results (4QFY19); Net Profit Down 84.2% (Quarterly Result Update)

Apr 26, 2019 | Updated on Apr 26, 2019

For the quarter ended March 2019, TATA STEEL has posted a net profit of Rs 23 bn (down 84.2% YoY). Sales on the other hand came in at Rs 424 bn (up 17.4% YoY). Read on for a complete analysis of TATA STEEL's quarterly results.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

TATA STEEL SHARE PRICE


Sep 18, 2020 03:37 PM

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 8-QTR ANALYSIS

COMPARE TATA STEEL WITH

MARKET STATS