Tisco advance tax spells good results
Asian
Age —
December 16, 2003
The Tata Iron and Steel
Company Limited on Monday paid an advance tax in the
range of Rs 400 crores to Rs 430 crores for the third
quarter, according to sources close to the company.
This indicates that the company is likely to post net
profits before tax in the range of Rs 1,050 crores to Rs
1,200 crores.
Tisco’s official spokesperson when contacted however,
refused to comment, saying it is price sensitive information.
The markets, however got a hint of this advance tax
payment as the Tisco scrip touched a 52-week-high of
Rs 393 on Monday gaining Rs 13 at the Bombay Stock Exchange.
On Friday too, the Tisco counter gained around 3.5 per
cent to touch Rs 378.65. At the current Rs 392.30 level,
the Tisco counter discounts the projected EPS for fiscal
year 2004, which was Rs 43 by a PE multiple
of 9.1.
Advance tax is a function of profit and hence is an
indication of the company’s profits. Companies have
to pay 15 per cent of the expected profits in the first
quarter, 30 per cent each in the subsequent two quarters
and the remaining 25 per cent in the final quarter. Hence,
if the company paid anywhere between Rs 410 crores to
Rs 430 crores as advance tax in the third quarter then
the net profit before tax is likely to be in the region
of Rs 1,050 crores to Rs 1,200 crores, analysts said.
It may be noted that Tisco profits for the whole of
last year was Rs 1,012.3 crores, which is estimated
to be around Rs 2,500 crores for the financial year
2004.
“The first two quarters are typically dull for steel
companies. Sales normally pick up in the latter half
of the year. Hence, the company is all set for a stellar
performance this year and the payment of a handsome
advance tax for the third quarter is an indication of
the same, said an equity analyst.
Analysts said that the performance was on the back of
successive rounds of steel price hikes since July. Steel
prices increased by around Rs 3,200-3,300 per tonne
during January-March, dipped by Rs 2,200-Rs 2,300 per
tonne during April-June and has seen at least two upward
price hikes since July.
|
|
