Tata Steel reverses course as Corus plans price hike
Tata Steel rose 1.93% to Rs 794 at 15:24 IST on BSE after Anglo-Dutch steelmaker Corus, owned by Tata Steel, announced price increases for reversing mill plate and structural sections.
On BSE, 14.93 lakh shares were traded in the counter. The scrip had an average daily volume of 8.95 lakh shares in the past one quarter.
The stock hit a high of Rs 804 and a low of Rs 757 so far during the day. The stock had a 52-week high of Rs 969.80 on 29 October 2007 and a 52-week low of Rs 469.66 on 30 April 2007.
The world's sixth largest steel maker had outperformed the market over the past one month till 22 April 2008, rising 31.81% compared to the Sensex's return of 9.77%. It had also outperformed the market in the past one quarter, rising 12.07% compared to Sensex's decline of 4.60%.
The company's current equity is Rs 730.58 crore. Face value per share is Rs 10.
The current price of Rs 794 discounts its Q3 December 2007 EPS of Rs 70.17, by a PE multiple of 11.31.
The announcement is a stark contrast to Tata Steel's earlier announcement of holding the domestic steel prices. Reportedly, Corus will be increasing basis prices for reversing mill plate by £60 per tonne effective to all dispatches from 1 June 2008. It will also be raising basis prices for structural sections by £80 per tonne, which will apply to all structural sections despatched from 29 June 2008. It also added global demand for reversing mill plate and structural sections continues to be strong.
Corus also asid steel manufacturers continue to incur significantly higher costs for raw materials and energy. It further added that the price increases are a direct consequence of high global demand for steel driving dramatic increases in the cost of raw materials.
Earlier in the day, shares of Tata Steel and other steel makers had declined on reports of Steel Authority India and Tata Steel deciding to hold domestic steel prices for at least a few months. Tata Steel and Steel Authority of India (SAIL) announced their plans not to increase domestic steel prices for next two-three months shortly after prime minister Manmohan Singh visited their plants and advised them to hold prices. Earlier, finance minister P Chidambaram had charged the steel producers with 'cartel-like behaviour' in the Parliament.
Tata Steel's net profit rose 0.5% to Rs 1068.58 crore on 11.3% growth in net sales to Rs 4973.92 crore in Q3 December 2007 over Q3 December 2006.
Tata Steel is engaged in manufacture and distribution of steel, welded steel tubes, cold rolled strips, bearings and other related products and services.