- Net Income: Steel Authority’s net income reached 11.8 billion rupees, marking a 17% increase year-over-year, and surpassing the estimate of 6.59 billion rupees.
- Revenue Growth: The company reported revenue of 293.2 billion rupees, up 4.9% from the previous year, and higher than the estimated 271.6 billion rupees.
- Total Costs: Total costs rose by 5.8% year-over-year to 280.2 billion rupees.
- Raw Material Costs: Experienced a decrease of 26% year-over-year, totaling 112.5 billion rupees, below the estimated 124.38 billion rupees.
- Finance Costs: Increased by 3.4% year-over-year to 6.64 billion rupees, slightly below the estimate of 6.72 billion rupees.
- Other Expenses: Rose by 10% from the previous year to 79 billion rupees, compared to the estimate of 70.2 billion rupees.
- Other Income: Declined by 15% year-over-year, totaling 3 billion rupees.
- EBITDA: Slightly decreased by 1.3% year-over-year, amounting to 37.81 billion rupees.
- Dividend: The company declared a dividend of 1.60 rupees per share.
- Analyst Recommendations: The stock has 6 buy ratings, 10 hold ratings, and 12 sell ratings from analysts.
Steel Authority of India on Smartkarma
Independent analyst Rahul Jain from Smartkarma issued a bearish report titled “Steel Authority of India: Weak on Expansion” on the company. Despite Steel Authority of India‘s (SAIL) significant resources, operational inefficiencies have caused underperformance and a loss in market share. Jain highlighted the presence of large iron ore reserves, multiple steel plants, and a diverse product range as strengths, but noted that legacy plants, an aging workforce, and operational inefficiencies have led to slower growth compared to competitors. This has resulted in high inventories, single-digit Returns on Equity (RoE), and weak volume visibility. Jain suggests a deeper discount on SAIL’s stock, proposing a price-to-book ratio of 0.6x to better reflect the risk-reward profile.
The analysis by Rahul Jain on SAIL’s weaknesses provides valuable insights for investors on Smartkarma. Jain’s research points out the disparity between SAIL’s potential and its current performance, emphasizing the need for operational improvements to regain market share. The analyst’s cautious stance, indicated by a bear lean, underscores concerns over SAIL’s elevated debt levels and weaker-than-expected volume outlook. With SAIL trading at 0.8x price-to-book ratio, Jain’s assessment suggests a potential undervaluation of the stock, prompting investors to consider the risk factors associated with the company’s operational challenges and debt burden.
A look at Steel Authority of India Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 5 | |
| Dividend | 5 | |
| Growth | 2 | |
| Resilience | 2 | |
| Momentum | 5 | |
| OVERALL SMART SCORE | 3.8 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
Steel Authority of India Limited, a prominent integrated steel manufacturing company, holds a positive long-term outlook based on its SmartKarma Smart Scores. The company excels in terms of value and dividend scores, indicating strong fundamentals and attractive returns for investors. Furthermore, with high scores in momentum, Steel Authority of India demonstrates robust market performance and investor interest in the stock.
Although the company’s growth and resilience scores are more moderate, the overall outlook remains optimistic due to its solid value proposition and dividend payouts. Steel Authority of India‘s diversified product portfolio, including a range of steel products and ferro alloys, positions it well in the market. With the government of India as a major shareholder, the company benefits from strategic support, adding to its stability and growth potential in the industry.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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