Tata Steel Posts Net Loss of Rs 789 Crore
DSIJ Intelligence / 14 Feb 2013
Tata Steel came out with a disappointing set of Q3FY13 numbers. On a consolidated basis, for the December 2012 quarter the Net sales of the company declined by 3.5% to Rs 31,821 crore while its Net loss widened by 15% to Rs 788 crore on a YoY basis.
Tata Steel came out with a disappointing set of Q3FY13 numbers today post market. It seems that the markets had anticipated its bad earning card and the participants witnessed a heavy sell off of 2.18% to Rs 376.15 per share in the second half of the trades. The following table gives us the overall performance of the company in the December 2012 quarter:
| Particulars | Dec 2012 | Dec 2011 | % change |
|---|---|---|---|
| Net Sales | 31821.5 | 32964.15 | -3.47 |
| Total Income from operations | 32107 | 33103 | -3.01 |
| Purchased Goods | 3949 | 5265 | -25.00 |
| Raw Material consumed | 9769 | 12618 | -22.58 |
| Employee expense | 4737 | 4294 | 10.32 |
| Purchase of Power | 1443 | 1251 | 15.35 |
| Total Expense | 29868 | 31189 | -4.24 |
| Operating Profit | 776 | 750 | 3.47 |
| Deprecation | 1463 | 1164 | 25.69 |
| Interest Expense | 1032 | 1060 | -2.64 |
| Profit / Loss sale of investment | -19.78 | 0 | - |
| Tax | 569 | 630 | -9.68 |
| Net Profit / Loss | -789 | -687 | 14.70 |
On a consolidated basis, for the December 2012 quarter the Net sales of the company declined by 3.5% to Rs 31,821 crore while its Net loss widened by 15% to Rs 788 crore on a YoY basis. This was well below the street’s expectations. On an average, the markets expected the company's topline to be around Rs 32,500 crore and Net loss of around Rs 250 crore. The company reported a net loss that was three times higher than what the streets had estimated.
The operating profit of the company grew by 17% to Rs 2,239 crore while operating margin increased by 119 basis points to 6.97% on a YoY basis.
On a standalone basis, the net sales of the company increased by 12% to Rs 9,370 crore while the Net Profit of the company declined by 26 % to Rs 1,046 crore on a YoY basis.
Overall, we believe that the company posted a really bad set of Q3FY13 numbers. It is consistently posting losses and hence one cannot determine its PE ratio. Further, the business environment in Europe still remains a major concern, impacting the overall growth outlook for the Steel Sector. The volatile steel prices with a declining trend would impact the overall realisation of the company.
After posting such disappointing numbers, we suppose that the stock may plunge further in the early trade tomorrow and hence would advise investors to stay away from the counter.
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