SAILs third quarter result reflects the challenges faced by industry, with EBITDA/ton down 69% YoY at INR2,439 due to a sharp decline in steel prices. We expect sales volume CAGR of 6% over FY20-22 as demand improves and capacity ramps up. Operating leverage benefits from higher volumes and better steel prices are likely to lead to improved margins. Coking coal cost is not expected to decline in 4QFY20 as price has moved up to USD150/t currently; there is a two-month lag in realization of spot prices at Based on FY19 iron ore production of 28 MMT, SAIL can sell up to 7 MMT (25% of 28 MMT) iron ore in the merchant market in FY20. which is one of SAILs largest customers, has had budgetary constraints, resulting in higher receivables and slower-than-expected deleveraging; dues from IR are at INR37b v/s normal level of INR8-10b.