Steel Authority of India (SAIL) Ltd. share price target

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

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.