Tisco got a lift from domestic mutual funds as expectations run high over the company's forthcoming results.
The share of the largest private sector steel-maker in the country and Tata group flagship edged up 1.70% to Rs 161.40 by 10:30 IST. Over 500,000 Tisco shares were exchanged on BSE by then.
The scrip rose 11.75% to its 52-week high of Rs 161.75 on Wednesday from Rs 144.75 on 6 January 2003.
Tisco is scheduled to unveil its third quarter results ended 31 December 2002 on 23 January 2003. For Q3, the steel major is expected to register a massive net profit growth in the range of 564.5-747% to Rs 229-292 crore (Rs 2.29-2.92 billion) on a 24.5-33% increase in net sales of Rs 2,089.5-2,233.6 crore (Rs 20.89-22.33 billion).
The exhilarating expectations follow the sustained rise in steel prices over the last few quarters. At the start of January 2003, steel makers had hiked steel prices by an average of Rs 700 per tonne. According to reports, in the current fiscal (since April 2002), steel makers raised steel prices by Rs 5,000 per tonne.
The good future prospects of Tisco is also holding the scrip in good stead. With steel prices ruling firm in international and domestic markets, Tisco's strong financial performance will be sustained in the next 2-3 quarters, say analysts.
Meanwhile, steel companies are expected to hike flat product prices by Rs 500 per tonne in February 2003. Reports reveal that, the low stock position of steel companies has propelled steel-makers to increase prices. The low stock position is due to a solid rise in exports. Besides, prices for flat steel products are firming up in both domestic as well as international markets.
Tisco has been at the forefronts of the steel sector, capturing an increased market share in niche value added segments. This not only resulted in expanding the company's market, but also in superior realisations. The realisations were the highest in galvanised steel, followed by cold rolled, hot rolled, longs and semis in the same order. The company has been consciously increasing the share of CR products in its portfolio, particularly after the installation of its CR mill.
For the first six months of 2003, the steel sector is expected to do exceedingly well as a result of firm steel prices in the domestic as well as global markets. However, in the second half, it would be difficult to take a call on the sector, due to the fact that long-term movement of steel prices is unpredictable.
Analysts feel Tisco will outperform the overall sector in any case. Market share and revenues are expected to improve in the current year, with revenues increasing by 10-15%. The company will also prove to be a major beneficiary following high value addition, increasing bottom line in 2003.
For the second quarter ended 30 September 2002, Tisco posted an impressive 642.6% rise in net profit to Rs 203.18 crore (Rs 2.03 billion) as against Rs 27.36 crore in the corresponding period last year. Net sales rose by 14.2% to Rs 2,207.03 crore (Rs 22.07 billion), from Rs 1,932.93 crore (Rs 19.32 billion) in SQ 2001.
As on 30 September 2002, the promoters' holding in Tisco was 26.5%, while that of the public and institutions was 31.7% and 30.23%, respectively.
BSE Code: 500470