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Tata Steel: The other income boost - Views on News from Equitymaster

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Tata Steel: The other income boost
Aug 12, 2011

Tata Steel has announced its June quarter results. The company has reported a 21% growth in consolidated topline and a 193% YoY growth in profits. Here is our analysis of the results.

Performance summary
  • Consolidated topline grows by 21% YoY during the quarter, led by 20% growth in standalone topline.
  • Operating margins contract by nearly 3% as higher raw material expenses and power costs take toll.
  • Bottomline grows by 193% YoY, much higher than the topline growth, mainly on account of huge jump in other income. The company made a profit of close to Rs 29 bn on the sale of its entire stake in Riversdale Mining Ltd. This accounts for the bulk of the growth in other income.

Financial Performance Snapshot
  Standalone results Consolidated results
(Rs m) 1QFY11 1QFY12 Change 1QFY11 1QFY12 Change
Net sales 65,515 78,603 20.0% 271,937 330,002 21.4%
Expenditure 36,350 47,571 30.9% 227,609 285,773 25.6%
Operating profit (EBDITA) 29,165 31,032 6.4% 44,328 44,229 -0.2%
EBDITA margin (%) 44.5% 39.5%   16.3% 13.4%  
Other income 484 5,526 1041.1% 593 38,823 6445.7%
Interest (net) 3,277 2,273 -30.6% 5,976 7,377 23.4%
Depreciation 2,802 2,853 1.8% 10,439 11,508 10.2%
Profit before tax 23,570 31,432 33.4% 28,505 64,167 125.1%
Extraordinary income/(expense) - -   (599) -  
Tax 7,776 9,238 18.8% 10,005 11,230 12.2%
Profit after tax/(loss) 15,794 22,194 40.5% 17,902 52,937 195.7%
Minority interest - -   (65) 248  
Share of profit ofassociates - -   416 281  
PAT after minority and sh. of assoc. profit 15,794 22,194 40.5% 18,253 53,466 192.9%
Net profit margin (%) 24.1% 28.2%   6.7% 16.2%  
No. of shares (m) 887.4 959.4   887.4 959.4  
Diluted earnings per share (Rs)*   78.2     130.3  
Price to earnings ratio (x)*   6.2     3.7  
(* annualised)

What to expect?

At the current price of Rs 475, the stock trades at a multiple of 3.7 times its TTM P/E on a consolidated basis. We will put up a detailed analysis shortly.

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Jul 16, 2018 (Close)

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