Tisco's net spurts 309% in 1QFY01 - Views on News from Equitymaster

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Tisco's net spurts 309% in 1QFY01

Jul 19, 2000

Tata Iron & Steel Company Limited (Tisco) has posted a sharp growth in net profits to over Rs 1 bn for the quarter ended 30th June 2000. The company has benefited from a stronger growth in realisations. Furthermore, Tisco has been successful in cutting costs which have contributed to better profit margins.

(Rs m) 1QFY00 1QFY01 Change
Sales 14,273 17,283 21.1%
Other Income 141 155 10.3%
Expenditure 11,910 13,705 15.1%
Operating Profit (EBDIT) 2,363 3,577 51.4%
Operating Profit Margin (%) 16.6% 20.7%  
Interest 858 1,031 20.1%
Depreciation 1,040 1,122 7.8%
Profit before Tax 606 1,580 160.9%
Other Adjustments -323 -475  
Tax 35 91 160.6%
Profit after Tax/(Loss) 248 1,014 309.0%
Net profit margin (%) 1.7% 8.6%  
No. of Shares (eoy) (m) 368.0 368.0  
Diluted number of shares 368.0 368.0  
Diluted Earnings per share* 2.7 11.0  
*(annualised)      

The main reason for the company's fantastic performance has been an improvement at the operating level. Higher interest and tax expenditure have however limited the rise in bottomline.

We have projected that the company would post a growth of 57% in profits for the full year. However, in view of the faster than expected rise in turnover and margins, there is a need to take a re-look at the projections. Our estimates put the margins at 19% for the full year. However, one key factor that needs to be looked into is whether the company will be able to sustain such growth in coming quarters.

The stock currently trades at Rs 135, implying a P/E multiple of 12 on first quarter annualised earnings.


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