SAILs 1QFY21 result was weak, as expected, with EBITDA loss of ~INR4.0b posted due to weak domestic demand and prices. SAIL guided for improvement in longs steel prices, led by demand In 2QFY21, raw material cost is likely to benefit from decline in coking coal prices. SAILs gross debt stood at INR544b at 1QFY21-end; however, it declined to INR498b at Aug-end owing to improved sales and liquidation of inventory. With improved pricing, lower coking coal costs, and better operating leverage, we expect SAIL to record EBITDA/t in excess of INR6,000/t in 2QFY21. As a result, SAILs finished steel inventory, which stood at 1.65mt in Jun20, declined to 1.23mt at Aug-end. In 1QFY21, SAIL sold 2.2mt of steel, of which exports stood at 0.5mt. SAIL guided for improvement in longs steel prices, led by demand improvement INR10,800/t in Aug20.