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Despite putting up a blockbuster performance in the fourth quarter of 2012-13, registering over 25 per cent growth in hot metal, crude steel and saleable steel production and in total sales, shares of Tata Steel Ltd sank to a fresh 52-week low on the NSE on Wednesday before staging a modest pullback at the close.
It was not only the Q4 of last year that was good for Tata Steel but even on an annual basis, 2012-13 turned out to be the best year for the company in terms of production and sales as it recorded its best ever show, with an identical increase of 14 per cent in production, and a 13 per cent increase in sales in terms of volume.
But the company’s record show in production and sales in terms of volume was not enough to push the stock price up and it fell to a new 52-week low of Rs 300 on the NSE, . It, however, recovered to Rs 305 at the close, a gain of 60 paise.
Probably what weighed with the market was how Tata Steel’s consolidated financial performance would be, rather than its production and sales numbers or its stand-alone results. It would also be keen to know how its European operations would impact its consolidated financial results, since Europe that accounts for a huge chunk of its capacity shows little signs of any significant recovery.
In a statement to the stock exchanges on Wednesday, Tata Steel said it had completed the financial year ending March 31, 2013 with an “overall increase in production and sales volumes’ and ‘registered its best-ever performance in hot metal, crude steel, saleable steel production and total sales.’
According to Bofa-Merrill Lynch report, “We expect domestic steel prices and margins to be under pressure post-March quarter as demand seasonally slows post fourth quarter. Also, discount to import parity has narrowed after the recent correction in global prices.”
It added: “We remain cautious on the domestic steel sector and maintain our underperform ratings on SAIL, Tata Steel, JSW Steel and Jindal Steel & Power.”
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