Stock Review - Tata Sponge Iron
Short-term target – Rs.365
Long-term target – Rs.414
A joint venture of Tata Steel and IPCOL (The Industrial Promotion & Investment Corporation of Orissa), TSIL (Tata Sponge Iron) was incorporated in 1982 to produce sponge iron.
Huge Market..!
With production of 3.83 lakh tonnes in FY 2011, it achieved capacity utilisation of 98.2%. This is a record for the zero-debt company. With manufacturing capacity of 3.9 lakh tonnes, it is addressing a huge market, estimated about 2.3 crore tonnes of hot briquetting iron and sponge iron in FY 2011.
Tata Sponge Iron is installing a boiler-based power plant, of 25 MW, to utilise the solid waste.
The project would be financed through internal generation and borrowings.
Tata Sponge Iron currently has installed capacity of 26 MW and sells the surplus, which is more than two thirds of its output. The new plant would further add to revenue and profit.
Finance results..!
Q2 FY12 results Sales, at Rs.168.02 crore, were sluggish. Even with revenue under pressure, margins rocketed 8.84%, from 8.93% to 17.77%. Consequently, the operating profit scaled a high of Rs.29.86 crore (up 90.80%). After providing for interest, the company generated cash before depreciation of Rs.36.02 crore. TSI’s ROE for FY11 was 21.86%.
At present, the stock trades below its 5 year average PE.
The FY11 EPS was Rs.66 The company has a Book Value of Rs.329 and a P/BV of 1x, also below its 5 year average P/BV of 2.25x.
Review by Anand Rathi
Corporate Address:
11th Floor, Times Tower Kamala City,
Senapati Bapat Marg,
Lower Parel. Mumbai - 400013, India.
Fax: +91-22-4047 7070
Tel : +91-22-4047 7000
Short-term target – Rs.365
Long-term target – Rs.414
A joint venture of Tata Steel and IPCOL (The Industrial Promotion & Investment Corporation of Orissa), TSIL (Tata Sponge Iron) was incorporated in 1982 to produce sponge iron.
Huge Market..!
With production of 3.83 lakh tonnes in FY 2011, it achieved capacity utilisation of 98.2%. This is a record for the zero-debt company. With manufacturing capacity of 3.9 lakh tonnes, it is addressing a huge market, estimated about 2.3 crore tonnes of hot briquetting iron and sponge iron in FY 2011.
Tata Sponge Iron is installing a boiler-based power plant, of 25 MW, to utilise the solid waste.
The project would be financed through internal generation and borrowings.
Tata Sponge Iron currently has installed capacity of 26 MW and sells the surplus, which is more than two thirds of its output. The new plant would further add to revenue and profit.
Finance results..!
Q2 FY12 results Sales, at Rs.168.02 crore, were sluggish. Even with revenue under pressure, margins rocketed 8.84%, from 8.93% to 17.77%. Consequently, the operating profit scaled a high of Rs.29.86 crore (up 90.80%). After providing for interest, the company generated cash before depreciation of Rs.36.02 crore. TSI’s ROE for FY11 was 21.86%.
At present, the stock trades below its 5 year average PE.
The FY11 EPS was Rs.66 The company has a Book Value of Rs.329 and a P/BV of 1x, also below its 5 year average P/BV of 2.25x.
Review by Anand Rathi
Corporate Address:
11th Floor, Times Tower Kamala City,
Senapati Bapat Marg,
Lower Parel. Mumbai - 400013, India.
Fax: +91-22-4047 7070
Tel : +91-22-4047 7000
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