Tisco bobbed up and down in early trades on Tuesday, but still managed a small gain of 0.3% to Rs 156 in mid-morning trades.
On Monday, the scrip had surged on expectations of a fresh hike in steel prices. Reports poured in today that steel majors have effected a hike in prices of flat steel products. This set off some amount of volatility on the Tisco counter .
The scrip traded in a band of Rs 2.30 in one hour's trading today, between a high of Rs 157.90 and a low of Rs 155.60.
The scrip has been on the up over the last few months but displayed volatility over the last few sessions, especially after the announcement of Q3 results on 23 January 2003. The volatility on the counter only reflected the broad-based volatility of the market. The scrip currently trades at a 52-week high of Rs 161.
As per reports, Sail, Tisco and other flat steel makers have hiked the prices of that product by Rs 1,000-1,400 per tonne effecting a second major price hike in the new year. The market was, in fact, expecting a major price hike from flat steel producers. Meanwhile, Sail and Vizag Steel are reported to have hiked prices of long steel prices by Rs 200-300 per tonne as well.
On the back of firm steel prices and an enriched product mix in favour of valued added products, Tisco reported robust Q3 ended 31 December 2003 results. Cost control also contributed to the surge in Q3 net profit. For Q3 ended 31 December 2002, the steel major posted a net profit of Rs 280.23 compared to a net profit of Rs 34.54 crore in the quarter ended 31 December 2001, recording a massive 711% rise. Tisco has reported a 27% increase in total income to Rs 2,152.69 crore (Rs 21.52 billion).
At the time of announcing Q3 results, Tisco said that in Q4 ending 31 March 2003, steel prices will remain at the same levels or marginally higher than in the December 2002 quarter. However, volume will be higher. In view of the current situation in the world, steel prices are likely to sustain in the next five to six months, it had said.
Tisco plans to utilise its cash profit towards capital expenditure and prepayment of high cost debts. The company has already repaid debts of Rs 500 crore (Rs 5 billion) and incurred capital expenditure of Rs 380 crore (Rs 3.8 billion).
Meanwhile, Tisco has also decided to focus on the Chinese market since quantitative restrictions have been removed and because China has a huge demand-supply gap.
The company is planning to expand its capacity at Jamshedpur works by 2 million tonne. The increase will be more in flat products
BSE Code: 500470
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