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.

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.

We are seeing Steel Authority of India Ltd. to emerge as strong winner on the back of strong expectation of revival in domestic demand growth across Infrastructure space backed by government spending and initiatives. Permission from government to sell 25% of Iron ore production of previous fiscal and iron ore fines accumulated as waste over past 5-6 decades to add ~10% to its EBITDA. US-China trade agreement is expected to revive metals. SAIL is expected to sail with the wind from iron ore mine lease expiries and uptick in steel demand to boost its profits and reduce leverage. A major turnaround in SAIL with favorable scenarios building in is expected to unlock great value for its stakeholders. Iron ore fines are turning into Gold' for SAIL: We expect SAIL to be major beneficiary of Government relaxation to sell 25% of previous FY iron ore captive production along with sub-grade iron ore fines that are accumulated over past half century on expectations of scarcity of material due to lease expiries of iron ore mines in Odisha. The company has 70MnT of sub-grade iron ore with average quality of 59% Fe content and expects to sell off these...

EBITDA declined 29% QoQ (-39% YoY) to INR15.8b (our estimate: INR17b) in 1QFY20 due to lower sales volumes (3.2mt v/s our estimate of 3.9mt). EBITDA per ton was down by INR490 QoQ to INR4,869 owing to operating deleverage/lower fixed cost absorption. Adj. PAT declined 85% QoQ to INR0.7b,...

3.2mn (PLe: 3.4mn) t. Realisations rose 1.7% QoQ/Rs740 (6% YoY/Rs3,050) to Rs45,075 above our estimate of Rs44,210. Cost/t rose 3% QoQ/Rs1,325 (flat YoY) at Rs40,745 (PLe:Rs40,630). Impacted by lower scale, EBITDA/t fell 9% QoQ (38% YoY) to Rs4,870 (PLe:Rs4,030). Hence, EBITDA fell 29% QoQ (39% YoY) to Rs15.8bn, ahead of our estimates of Rs13.6bn. Due to better than expected margins, PAT came above our estimate at Rs688mn (PLe: loss...

Margins lower on decline in product spreads Tailwinds of operating leverage; Maintain Neutral 4QFY19 EBITDA declined 14% QoQ (-15% YoY) to INR22.1b (our est. INR25.1b) on lower spreads (lower realization and high raw material cost). EBITDA/t was...

7 February 2019 SAILs 3QFY19 EBITDA increased 9% QoQ (+66% YoY) to INR25.8b (v/s our est. of INR14.4b) on expansion of spreads (realization raw material cost). EBITDA per ton was up INR1,159/t QoQ to INR7,965/t, primarily due to operating efficiencies and leverage. Adj. PAT increased 10% QoQ to INR6.3b (v/s our est. Steel sales declined 7% QoQ (down 14% YoY) to 3.2mt hurt by volatility in steel prices in the latter part of the quarter. Production, however, was robust and increased 7% QoQ (+5% YoY) to 3.8mt, thus providing operating leverage. Inventories increased massively by INR21b (~300kt).

Steel Authority of India Ltd Q2FY19 results Comment Revenue rose by 5.1% to Rs. 16718.04 Cr in Q2FY19 when compared to the previous quarter. Also, it rose by 22.77% when compared with Q2FY18.

2 November 2018 2QFY19 due to lower spreads (realization raw material cost). EBITDA per ton was down INR1,071 QoQ to INR6,806. Adj. PAT declined 20% QoQ to INR5.8b Steel sales increased 6% QoQ (-2% YoY) to 3.5mt. Production was down 2% QoQ (-3% YoY) to 3.5mt. Steel realization declined 1% QoQ to INR48,109 per ton, as 2Q is a seasonally weak quarter due to monsoon. Product spreads declined 9% QoQ to INR26,401 as raw material costs were also higher. Employee cost declined 3% QoQ/YoY to INR21.6b. The number of employees reduced by ~1% QoQ to 74.4k. Interest and depreciation cost increased 2% QoQ to INR7.

Revenue fell by 6.64% to Rs. 15907.19 Cr in Q1FY19 when compared to the previous quarter. Steel Authority of India Ltd Q1FY19 results Comment

profitability. It continued to disappoint on the cost and volumes growth due to poor performance on stabilization of new capacities. We remain extremely positive on the sector given the structural change in operating by Chinese steel mills with profitability being the key focus area, closure of capacities in China for pollution control and firm global demand. We believe that Private sector companies are better candidates to play the sector given their high quality operations and better visibility. Hence, we continue to maintain our...

4 August 2018 SAILs operating performance continues to improve on tailwind of strong demand and operating cost control. EBITDA per ton increased 13% QoQ to INR7,877 on increase in steel product spreads. EBITDA however declined 1% QoQ to INR25.7b (in-line) due to 13% QoQ decline in sales volume to 3.3mt on seasonal restocking. Steel realization increased 7% QoQ to INR48,631 per ton on strong demand. RM cost) increased sharply by 15% QoQ to INR28,993. EBITDA per ton increase was however lower due to QoQ lower volumes and increase in employee cost. Employee cost increased 8% QoQ (17% YoY) to INR22.2b. Operating parameters continue to show improvement.

At the CMP of 82, SAIL is trading at 5.3X FY19 EV/Ebidta. We initiate

31 May 2018 SAILs operating performance continues improving, driven by the tailwind of strong demand and significantly better steel prices. 4QFY18 EBITDA increased 68% QoQ to INR26b (20% beat), driven by higher steel prices (+12%; 6% beat), partially offset by increased other operating expenses. EBITDA per ton increased 69% YoY to INR6,945. Interest and depreciation, too, increased due to capitalization of projects. INR5.8b provision toward an increase in cap on gratuity had a negative impact and INR3.3b w/back had a positive impact on the wage bill and PAT. Adj. PAT increased 3x QoQ to INR6b. EBITDA was INR52b (v/s INR380m in FY17) and adj. loss before tax reduced from INR27b to INR1.3b. Net debt increased by INR40b, while capex stood at INR51b for the full year. SAIL has done a commendable job in containing the wage bill from ballooning.

Exceeding ours and streets estimate by a wide margin, Steel Authority of India (SAIL) has reported a stellar performance on operating front in 2QFY18. Its EBITDA surged by 721% YoY to Rs9.1bn and compared to a Rs839mn EBITDA loss on a sequantial basis (vs. our estimate of Rs1.46bn) largely due to lower-than-estimated raw material cost. However, its sales volume declined by 1% YoY (+17% QoQ) to 3.54mnT (below our estimate of 3.9mnT). Net revenues surged by 21.3% YoY and 17.6% QoQ to Rs136bn, but was lower than our estimate due to lower volume. Realisation increased by 22% YoY (flat on sequential basis) to Rs38,424/tonne. Notably, revenue in 1QFY18 was aided by recognition of Rs2.5bn following finalisation of prices of rails supplied...

Steel Authority of India Ltd Q2FY18 results comment Revenue increased by 17.6% to Rs. 13617.42 Cr in Q2FY18 when compared to the previous quarter. Also, it grew by 21.31% when compared with Q2FY17.

Lower RM cost and higher volume drive EBITDA increase SAIL turned EBITDA positive at INR9.1b in 2QFY18 (7% beat), as against a loss of INR0.8b in 1QFY18, due to lower raw material costs and higher volumes. Interest cost rose 9% QoQ to INR6.4b and depreciation increased 10% QoQ to INR7.6b. Net exceptional charge of INR2.9b pertains to (a) excess mining case in Odisha and Jharkhand of INR3.3b, (b) VRS of INR2.1b and (c) DMF reversal gain of INR2.4b. Adj. net loss reduced from INR7.9b in 1QFY17 to INR3.2b (est. of INR6.6b). Sales grew 17% QoQ (-2% YoY) to 3.5mt. NSR increased just 1% QoQ to...

prices in 1QFY18, we expect its margins to improve with the stabilisation in coking coal prices and lower employee cost, going forward. Notably, SAIL continues to remain mostly exposed to long steel products, where the prices continue to remain volatile due to weak demand scenario and low steel scrap prices. Notebly, SAIL also does not benefit from exports as much as JSW Steel...

Revenue fell by 8.75% to Rs. 11579.56 Cr in Q1FY18 when compared to the previous quarter Revenue fell by 8.75% to Rs. 11579.56 Cr in Q1FY18 when compared to the previous quarter