Tisco is the toast of steel scrips today as the market hails the company for its emphasis on high margin valued-added products.

The scrip the Tata group flagship gained 2.4% to Rs 170.75 on BSE in morning trades. The stock hit a high of Rs 171.75, a 52-week high, earlier in the day. Around 6.8 lakh Tisco shares were traded on BSE.

Tisco surged 5% to Rs 166.75 on Friday. Volumes were awesome then, at 32.3 lakh shares . According to dealers, Alliance has been mopping up the stock recently.

The stock has witnessed a sustained rise in the last few trading sessions. From a recent low of Rs 147.80 on 16 June 2003, it has surged 12.8% in the last 10 trading sessions to the current Rs 170.75.

Talk of a possible hike in product prices by steel companies has fuelled the rally in the stock. Analysts are in favour of Tisco because of the company's focus on improving the share of value added products in its product profile.

In fact, it is the higher share of value added products in its portfolio that has helped Tisco towards a strong performance in FY 2002-03. No doubt, a surge in realisations due to a hike in product prices has been another major driver of Tisco's buoyant FY 2002-03 results.

As per some media reports , steel makers are set to hike prices by about Rs 400-700 per tonne with effect from Monday. In addition, the demand from China, which is one of the most important steel consuming markets in the world, has started picking up after the easing of SARS worries.

This is having its impact on global steel prices (causing them to rise). Local steel makers are expected to toe the line of global steel price trends now, reports say. Steel players will now be raising prices after a three-month hiatus.

The announcement of high import quotas from China too has aided the rise in Tisco and other steel counters. Recently, China announced higher annual quotas for steel imports. The world's largest steel importer has decided to buy 9.2 million tonnes of steel from Indian companies over a one-year period.

For Q4 ended 31 March 2003, Tisco recorded a massive 283% rise in net profit to Rs 469.08 crore (Rs 122.47 crore) on a 39.5% increase in net sales to Rs 2,664.76 crore (Rs 1,911.48 crore). The Q4 net profit as well as net sales beat projections made by a capitalmarket.com poll - a rise of 177% to 252% in net profit to Rs 339.5-431 crore and net sales of Rs 2,459 crore-2,555.3 crore.

For FY 2002-03, Tisco recorded a 394% rise in net profit to Rs 1,012.31 crore (Rs 204.90 crore) on a 29.3% increase in total income to Rs 8,771.71 crore (Rs 6,783.12 crore). On a consolidated basis, the group posted a huge 428% increase in net profit to Rs 1,021.77 crore (Rs 193.57 crore) on a 22.3% rise in total income to Rs 9,183.74 crore (Rs 7,511.36 crore).

Increase in sales realisations due to firm product prices and a higher share of value-added products boosted Q4 results. A surge in exports also aided the strong growth. Tisco reported an impressive 144% growth in exports to Rs 422.15 crore in the quarter ended 31 March 2003.

As a result, the share of exports (in sales, net of excise duties) jumped to 15.8% in the quarter from 9% in the previous corresponding quarter. Exports in US$ terms jumped by 152% to US$ 88.73 million.

Tisco has been engaged in mining of iron ore, sourcing its ore from captive mines in Jojobera. Now the company plans to start iron ore mining as a commercial activity. This will not only add to the revenues of the company, but will also help in reducing the company's own raw material costs, analysts feel.

This initiative could boost the company's growth, and also make it a fully integrated player having presence in activities starting right from mining to galvanizing.

The bullishness on the Tisco counter stems from expectations of a recovery in domestic steel demand. The Centre's thrust on infrastructure in the Union Budget for 2003-04 has played a major part in boosting these expectations.

Principally, investments will be made in railways, airports and sea ports through an innovative funding mechanism.