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PrintSteel Authority of India Ltd. Tuesday posted a forecast-exceeding fourth-quarter net profit, helped by higher steel prices and sales volume that offset a rise in coking-coal cost.
Net profit for the quarter through March rose 3% to INR15.77 billion ($283 million), topping the INR13.39 billion average of forecasts in a Dow Jones Newswires poll of six analysts.
Income from operations increased 13% to INR150.8 billion, the state-run steelmaker said.
The company's sales volume in the past quarter rose to 3.3 million metric tons from 3.1 million tons a year earlier, driving its revenue up, Chairman C.S. Verma told reporters.
It also benefited from a 6.6% price increase announced in February for steel bars used in building construction.
However, most of the gains were offset by a fall in the Indian rupee's value, which increased its cost of importing coking coal.
Coking coal, which isn't produced in India, is required to convert iron ore into steel. The company has its own iron-ore mines and so isn't affected by fluctuations in ore prices.
The rupee last week hit an all-time low of 56.37 against the dollar, and is currently trading close to that level with many fearing further downside to the local currency. The weakening rupee is a risk to Steel Authority because of its dependence on imports.
Verma said despite the chances for higher coking-coal cost, he expects steel prices to remain stable over the next few months.
Steel Authority's shares rose as much as 3.5% after the results, before reversing the gain to close 0.3% down at INR93.15 on the Bombay Stock Exchange, where the benchmark index ended 0.1% up.
The company said it plans to expand its production capacity of saleable steel to 23.1 million tons in the current fiscal year that started April 1 from the present 12.6 million tons.
It spent INR110 billion on modernization and expansion of its mills in the last fiscal year and has a INR145 billion capital-expenditure target for this year.
The chairman said Steel Authority will raise the funds through a mix of external commercial borrowings and local debt.
It had cash reserves of INR59.0 billion as of March 31, he added.
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