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

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.

SAIL's Q1FY21 net sales was in-line with street estimate while its net loss was lower than street forecast. Its net sales fell 39% YoY to Rs91 bn. Although its operations resumed in second half of the quarter with limited workforce and disrupted supply chain, the imposed restrictions adversely impacted its sales volume and realization in Q1FY21. Volumes declined 32% YoY to 2.2 mn tonnes and realization fell 10% YoY to Rs41,216/tonne. SAIL's EBITDA loss stood at Rs4 bn due to sharp fall in net sales. SAIL reported a net loss of Rs13 bn in Q1FY21. We broadly maintain our FY21/FY22 estimates. We continue to value the stock at an...

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...

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...

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,...

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.