Tata Steel hardens as it expects higher profit margins at European unit.

Capital Market / 15:23 , Jun 29, 2011 

 

Tata Steel rose 2.51% at Rs. 602.05 at 15:16 IST on BSE on reports the company expects operating profit at its European unit to rise by two-thirds of its current level to $100 a metric tonne over the next three years.

 

Meanwhile, the BSE Sensex was up 167.39 points, or 1.01%, to 18,679.78.

On BSE, 7.44 lakh shares were traded in the counter as against an average daily volume of 7.11 lakh shares in the past one quarter.

The stock hit a high of Rs. 602.40 and a low of Rs. 589 so far during the day. The stock had hit a 52-week high of Rs. 713.80 on 4 January 2011 and a 52-week low of Rs. 448.65 on 26 July 2010.

The stock had underperformed the market over the past one month until 28 June 2011, gaining 0.33% compared with the Sensex's 1.24% rise. The scrip had also underperformed the market in past one quarter, sliding 4.26% as against 2.38% decline in the Sensex.

India's largest steel maker by sales has an equity capital of Rs. 959.21 crore. Face value per share is Rs. 10.

Tata Steel Europe generates earnings of $60 per tonne before interest, tax, depreciation and amortization at present. Tata Steel's managing director Hemant Nerurkar on Tuesday, 28 June 2011, said higher operating margin at the European unit will be driven by increase in value-added products and control over costs.

Nerurkar said the unit, formerly called Corus, would produce around 15 million to 16 million tonnes of crude steel in the year ending March 2012, up from 14.8 million tonnes last year.

Tata Steel Europe turned around its performance during the last few quarters by cutting costs. It sold its Teesside plant in the UK and reduced staff at some other facilities. The company is banking on a gradual recovery in demand for steel in northern Europe and the UK to drive its production and revenue higher over the next few years.

Nerurkar added that India's steel demand is expected to keep growing by 10.4%-10.5% a year mainly due to consumption by the construction industry as both the private sector and the government makes large investments in infrastructure development. But there could be some slow down in steel demand from automobile and consumer-durables companies, as higher interest rates in India have made loans for buying cars and appliances more expensive, he added.

Tata Steel's consolidated net profit jumped 71.5% to Rs. 4175.60 crore on 22.8% rise in net sales to Rs. 33442.66 crore in Q4 March 2011 over Q4 March 2010.

 Source IIFL

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Phone No: 09899365905
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Duel with inflation continues, RBI hikes rate again, signals more

16th June 2011

Auto and home loans are set to get costlier as India's central bank Thursday hiked short term lending rates by 25 basis points in a bid to curb inflation and indicated that more such increases were in the offing.

The Reserve Bank of India (RBI) raised the repo rate by 25 basis points from 7.25 percent to 7.5 percent with immediate effect. As per the structural changes announced in the monetary policy for 2011-12, the reverse repo rate stands automatically revised to 6.5 percent.

This is the tenth time the RBI has raised interest rates since March 2010.

"Domestic inflation remains high and much above the comfort zone of the Reserve Bank," said the RBI in the mid-quarter monetary policy review.

"While the Reserve Bank needs to continue with its anti-inflationary stance, the extent of policy action needs to balance the adverse movements in inflation with recent global developments and their likely impact on the domestic growth trajectory," the RBI added.

Latest data showed that annual inflation rose to 9.06 percent in May, compared to 8.66 percent in the previous month. Food inflation too is hovering around a high 8.96 percent as recorded for the week ending June 4.

The central bank said that the current increase in repo rate would help "contain inflation and anchor inflationary expectations by reining in demand side pressures and mitigate the risk to growth from potentially adverse global developments."

Other policy rates such as the statutory liquidity ratio and the cash reserve ratio — the minimum quantum of money against deposits which the banks have to retain as cash or specified government securities — have been left untouched.

The bank rate also remains unchanged at 6 percent.

Signalling continuation of its hawkish monetary stance, the RBI said it would persist with more rate hikes to contain inflation.

"Based on the current and evolving growth and inflation scenario, the Reserve Bank will need to persist with its anti-inflationary stance of monetary policy," the central bank said.

It also maintained the projection for gross domestic product growth for 2011-12 at around 8 percent.

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R. Saxena
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Thanks & Regards 
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Phone No: 09899365905
Mail Id: simmi9sep@gmail.com