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Friday 10 October 2008

Market Matrix - Value in Tata Steel at current share quotes

Friends,

Please note some numbers concerning Tata Steel:

Capital: Rs 731 crs Reserves Rs 21097 crs CMP(101008) Rs 287

It has sold steel worth Rs 20028 crs (07-08), Rs 17985 (06-07) and Rs 15394 crs (05-06) in last three years.

It has earned post tax profits of Rs 4687 crs, Rs 4222 crs and Rs 3506 crs over the last three years, this comes to total of Rs12415 crs ie Rs 170 per share. It has accounted for depreciation of Rs 2428 crs which is equivalent of Rs 33 per share.

Therefore its cash generation for last three years ended Mar 08 is equal to Rs 203 per share. The market has let it be traded for just Rs 283 today. The present value of its assets on revaluation would amount to no less than Rs 800 per share today after debt is paid out.

I talk to people and they seem to be so scared that they can not have any perception of value. I have been maintaining that the down side has limited scope simply on the strength of asset values with leading companies. These companies have capacity to buy all their outstanding stock out of their cash inflow over the next few years. I can not speak for US or European companies but for Indian companies I may say that the sum of parts for them is much more than the share prices prevailing today. The emotional damage to Indian investor psyche would correct if the govt instructs institutions and banks to buy in a small way in a falling market.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market
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