Tisco lost ground on Wednesday on selling pressure following reports that stock pile-up at China's ports has softened global steel prices, which have slipped by $30 per tonne in the last two months to $290 per tonne.
The scrip of India's largest private sector steel manufacturer and Tata group flagship declined by 1.44% to Rs 133.70 on the BSE by 12:41 IST. A relatively higher volume of over 450,000 shares was recorded on the counter.
Analysts said the selling pressure on the Tata Iron & Steel Company counter was purely on reports that global steel prices have fallen following the pile-up of stocks in Chinese ports, which may exert pressure on domestic prices. China is one of the biggest importers of steel for its huge infrastructure projects. The piling up of steel stocks in the Chinese ports is on expectations that the government may issue new import quotas from 24 May 2003.
Also, there were concerns on the steel demand from China following the Severe Acute Respiratory Syndrome epidemic, which could have an adverse impact on the growth of the steel sector as well as Tisco, which is concentrating more on China for its exports. SARS may be a temporary phenomenon, but it is the biggest dampener in the near-term. SARS, a new epidemic, is fast spreading around the world, which has taken close to 400 lives so far. The bulk of the cases are in China, Hong Kong and Singapore.
Analysts said that due to SARS the prices and demand for steel is likely to be hit in the near-term.
Meanwhile, for the fourth quarter ended 31 March 2003, analysts expect Tisco to record a phenomenal performance, with a net profit in the range of Rs 340-422 crore (Rs 3.4-Rs 4.22 billion), a rise of 177.5-244.5%, on net sales growth of 28-38.5% to Rs 2,460-2,660 crore (Rs 24.6-26.6 billion).
For the third quarter ended 31 December 2002, Tisco posted a net profit of Rs 280.23 crore (Rs 2.8 billion) as against Rs 34.54 crore in the corresponding period of the previous year. Net sales rose by 27% to Rs 2,152.69 crore (Rs 21.5 billion) from Rs 1,694.63 crore (Rs 16.94 billion) in DQ 2001.
BSE code: 500470
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