Materials| Industrials |Commodities

Rahul Jain

Equity Bottom-Up

Steel Authority of India / Equity Bottom-Up

<ul>
<li>SAIL has been a consistent under-performer despite having huge iron ore reserves, multi-location steel plants and wide product spectrum and exclusive sales to Indian Railways</li>
<li>Legacy plants, ageing manpower and operational inefficiencies have resulted in slower growth compared to peers and a significant loss in overall market share, high inventories and single digit RoEs</li>
<li>SAIL trades at 0.8x P/B, in line with history, but weak volume visibility and elevated debt warrant a deeper discount—0.6x book better reflects risk-reward, in our view.</li>
</ul>


SAIL has been a consistent under-performer despite having huge iron ore reserves, multi-location steel plants and wide product spectrum and exclusive sales to Indian Railways
Legacy plants, ageing manpower and operational inefficiencies have resulted in slower growth compared to peers and a significant loss in overall market share, high inventories and single digit RoEs
SAIL trades at 0.8x P/B, in line with history, but weak volume visibility and elevated debt warrant a deeper discount—0.6x book better reflects risk-reward, in our view.


Steel Authority of India: Weak on Expansion

External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

Axis Direct is the flagship brand under Axis Securities Limited, a subsidiary of Axis Bank in India. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>India remained a net importer of steel from Apr’24, and net imports peaked at 0.7 MT in Aug’24.</li><li>China’s steel exports grew by 22% YoY to 111MT in CY24, a level last seen in CY15 (112 MT in CY15), leading to lower regional steel prices and higher Indian imports.</li><li>Steel net imports, however, have now declined to 0.2 MT in Feb’25 on account of the DGTR probe for the imposition of safeguard duties. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

India remained a net importer of steel from Apr’24, and net imports peaked at 0.7 MT in Aug’24.China’s steel exports grew by 22% YoY to 111MT in CY24, a level last seen in CY15 (112 MT in CY15), leading to lower regional steel prices and higher Indian imports.Steel net imports, however, have now declined to 0.2 MT in Feb’25 on account of the DGTR probe for the imposition of safeguard duties. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Steel Authority of India Ltd (SAIL) - Risk-Reward Turning Favorable; Upgrade to BUY

<ul><li>Spreads likely to improve slightly in Q4FY25: Blended Coking coal costs are expected to come down by ~Rs 1,000/t QoQ in Q4FY25, led by declining imported coking coal prices.</li><li>Average blended NSR in Jan’25 was down by ~Rs 1,000/t at Rs 48,500/t; however, prices are likely to increase in coming months as market sentiments are now positive for flat steel.</li><li>This could improve spreads slightly QoQ in Q4FY25.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Spreads likely to improve slightly in Q4FY25: Blended Coking coal costs are expected to come down by ~Rs 1,000/t QoQ in Q4FY25, led by declining imported coking coal prices.Average blended NSR in Jan’25 was down by ~Rs 1,000/t at Rs 48,500/t; however, prices are likely to increase in coming months as market sentiments are now positive for flat steel.This could improve spreads slightly QoQ in Q4FY25.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Steel Authority of India Ltd - Largely Inline Q3, Higher Leverage Risk Persists

External broker reports(aggregated public sources), Motilal Oswal Financial Services Limited

Motilal Oswal

Motilal Oswal Financial Services Limited

Motilal Oswal Financial Services Limited is an Indian diversified financial services firm offering a range of financial products and services. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>In 2QFY25, SAIL received a one-time revenue and EBITDA gain of INR16.4b related to rail price revisions for FY23.</li><li>For a like-to-like comparison, we have adjusted its 2QFY25 financials by excluding this one-time gain.</li><li>SAIL reported a revenue of INR230b (-18% YoY and -4% QoQ), which was 12% below our estimate of INR262b.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

In 2QFY25, SAIL received a one-time revenue and EBITDA gain of INR16.4b related to rail price revisions for FY23.For a like-to-like comparison, we have adjusted its 2QFY25 financials by excluding this one-time gain.SAIL reported a revenue of INR230b (-18% YoY and -4% QoQ), which was 12% below our estimate of INR262b.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Sail - Weak Volumes and Low Realization Drag Down Earnings

<ul><li>Spreads likely to remain muted in Q3FY25: Imported Coking coal prices may decline by ~Rs 1,600-1,700/t QoQ in Q3FY25.</li><li>However, the average blended NSR in Q3FY25 is likely to come down QoQ by Rs 1,750/t as it averaged Rs 48,750/t so far in Oct-Nov’24 which is lower than the blended average of Rs 50,500/t realized in Q2FY25.</li><li>This is likely to keep the spreads muted QoQ in Q3FY25.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Spreads likely to remain muted in Q3FY25: Imported Coking coal prices may decline by ~Rs 1,600-1,700/t QoQ in Q3FY25.However, the average blended NSR in Q3FY25 is likely to come down QoQ by Rs 1,750/t as it averaged Rs 48,750/t so far in Oct-Nov’24 which is lower than the blended average of Rs 50,500/t realized in Q2FY25.This is likely to keep the spreads muted QoQ in Q3FY25.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Steel Authority of India Ltd - Weak Q2, Rising Leverage Raises Concern

India

Steel Authority of India Limited is an integrated steel manufacturing company. The Company's products include pig iron, steel ingots, liquid steel, alloy steel, special steel, stainless steel, ferro alloys, ERW pipes, spirally welded pipes, and calcium ammonium nitrate.  The Government of India is currently a majority shareholder in the company.

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Steel Authority of India (SAIL IN)

Steel Authority of India: Weak on Expansion

Despite its vast resources, SAIL's operational inefficiencies have led to underperformance and a loss in market share. A deeper discount on its...

Rahul Jain

Steel Authority of India Ltd (SAIL) - Risk-Reward Turning Favorable; Upgrade to BUY

China’s steel exports grew by 22% YoY to 111MT in CY24, a level last seen in CY15 (112 MT in CY15), leading to lower regional steel prices and...

Axis Direct

Steel Authority of India Ltd - Largely Inline Q3, Higher Leverage Risk Persists

Spreads likely to improve slightly in Q4FY25: Blended Coking coal costs are expected to come down by ~Rs 1,000/t QoQ in Q4FY25, led by declining...

Axis Direct

Sail - Weak Volumes and Low Realization Drag Down Earnings

For a like-to-like comparison, we have adjusted its 2QFY25 financials by excluding this one-time gain. SAIL reported a revenue of INR230b (-18% YoY...

Motilal Oswal

Steel Authority of India Ltd - Weak Q2, Rising Leverage Raises Concern

Management expects Net Debt to come down to Rs 30,000 Cr by FY25 end as it expects to pick up sales volume in H2FY25 post the weak H1FY25 performance.

Axis Direct

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Steel Authority of India: Weak on Expansion

​Despite its vast resources, SAIL's operational inefficiencies have led to underperformance and a loss in market share. A deeper discount on its...

Rahul Jain

Steel Authority of India Ltd (SAIL) - Risk-Reward Turning Favorable; Upgrade to BUY

China’s steel exports grew by 22% YoY to 111MT in CY24, a level last seen in CY15 (112 MT in CY15), leading to lower regional steel prices and...

Axis Direct

Steel Authority of India Ltd - Largely Inline Q3, Higher Leverage Risk Persists

Spreads likely to improve slightly in Q4FY25: Blended Coking coal costs are expected to come down by ~Rs 1,000/t QoQ in Q4FY25, led by declining...

Axis Direct

Sail - Weak Volumes and Low Realization Drag Down Earnings

For a like-to-like comparison, we have adjusted its 2QFY25 financials by excluding this one-time gain. SAIL reported a revenue of INR230b (-18% YoY...

Motilal Oswal

Steel Authority of India Ltd - Weak Q2, Rising Leverage Raises Concern

Management expects Net Debt to come down to Rs 30,000 Cr by FY25 end as it expects to pick up sales volume in H2FY25 post the weak H1FY25 performance.

Axis Direct

Despite its vast resources, SAIL's operational inefficiencies have led to underperformance and a loss in market share. A deeper discount on its...