SAIL reported a better-than-expected operational performance. The company reported a healthy EBITDA primarily on the back of higherthan-expected realisations and lower operating cost per tonne .The sales volume came in at 2.8 million tonnes (MT), up 3.7% YoY, down 26.3% QoQ and lower than our estimate of 3.2 MT. Subsequently, total operating income came in at | 9238.1 crore, down 2.7% YoY, 18.8% QoQ and lower than our estimate of | 10465.7 crore. Sales realisation in the quarter was at | 32437/tonne, up 8.4% QoQ. A significant operational performance at the Bokaro Steel plant registering a PBIT of | 55 crore against heavy losses both YoY, QoQ has been a key highlight of the turnaround achieved during the quarter. The company reported a healthy EBITDA of | 233.8 crore against losses both YoY and QoQ (significantly higher than our estimate of | 81.3 crore). The resultant EBITDA/tonne came in at | 835/tonne notably higher than our estimate of | 250/tonne. The better-thanexpected operating performance was primarily driven by healthy realisations and lower operating cost per tonne, which fell 9.4% YoY and 2.2% QoQ. The company reported a net loss of | 535.5 crore, which broadly came in line with our estimate of | 554 crore.

The company reported a better-than-expected operational performance on account of healthy realisation and lower operating costs. Going forward, we have maintained both sales volume and EBITDA/tonne estimates for FY17E and FY18E. We have valued the stock at 6.5x FY18E EV/EBITDA (from earlier 6x) given the turnaround at the EBITDA level after a few quarters and arrived at a target price of | 45. They have upgraded our recommendation on the stock to HOLD.