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

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.

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...