Tata Steel share price slid as much as 4.5 per cent in the morning trade on Friday as investors reacted to the earning results of the company that were announced on Thursday post market hours. The earnings of Tata steel were hit by a flood of cheap imports from China in its key European and Indian markets. However the company’s consolidated profit rose 22 per cent, boosted by a one-time gain from the sale of its investments in group companies.
At 12.21 pm, shares of Tata Steel were trading 3.61 per cent down at Rs 217.45. The scrip opened at Rs 218.70 and had touched a high and low of Rs 221.25 and Rs 215.25, respectively, in trade so far. Sensex was down 0.10 per cent at 26,278.59. Later, the scrip closed 2.44 per cent down at Rs 220.10
Consolidated net profit in July-September rose to Rs 1,528.71 crore from Rs 1,254.33 crore in the same period a year ago. However, sales fell 18 per cent to Rs 29,304.69 crore in the July-September quarter this fiscal from Rs 35,777.11 crore in the same quarter of 2014-15.
The firm’s South East Asian operations continued to witness drop in rebar-scrap spreads and intense pricing pressure on back of imports from China. However, the renewed focus on cost saving initiatives, new markets, downstream sales and exports, led to improved profitability.
Tata Steel has also decided to “restructure its Chinese operations in Xiamen and consequently have taken a charge of Rs 158 crore during this quarter,” it said.
Religare Securities in a research report said, “Tata Steel consolidated Q2 results missed estimates on EU losses, even as India business outperformed. A sharp recovery would require strong Chinese supply discipline or widening the safeguard net.” The brokerage house downgraded the stock with ‘Sell’ rating and reduced Tata Steel target price to Rs 195 from Rs 280 earlier.
(With inputs from PTI)