Sell SAIL; target of Rs 111: Motilal Oswal

62467 Investors following SAIL. Share this News with them.

0

Like this story, share it with millions of investors on M3

Sell SAIL; target of Rs 111: Motilal Oswal

Motilal Oswal is bearish on Steel Authority of India (SAIL) and has recommended sell rating on the stock with a target of Rs 111 in its February 14, 2012 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Hold State Bank of India; target of Rs 2366: KRChoksey Hold Sun TV Network; target of Rs 359: KRChoksey Hold BPCL; target of Rs 723: SPA Research ALSO READ See previous views by Motilal Oswal See what other Experts & Brokerages are saying about SAIL See messages about SAIL SAIL BSE | NSE 01/06/12 Are Mutual Funds betting on SAIL?

Motilal Oswal is bearish on Steel Authority of India (SAIL) and has recommended sell rating on the stock with a target of Rs 111 in its February 14, 2012 research report.

"SAIL's adjusted 3QFY12 PAT increased 28% QoQ to INR6.3b, higher than our estimate of INR4.7b, driven by increased realizations (up 4%), despite lower volumes (down 5%). Other income was also was higher and staff cost lower. Reported PAT of INR6.3b included a forex loss of INR4.7b on deffered payments for imported inputs which we treat as normal expenditure. A sum of INR1.38b of forex loss on long-term borrowings has been appropriated to fixed assets. Realization per ton for saleable steel was boosted by stronger long product and semis market during the quarter despite subdued demand. Smaller secondary producers suffered from shortage of iron ore."

"The INR12.6b increase in stock absorbed large amount of fixed costs as inventories of finished products and work in progress increased. Provisions for pension liabilities for non-executive staff would be provided later. Other income remains high as SAIL continues to fund projects with debt while maintaining significant amount of cash and liquid investments. We are upgrading FY13 EPS estimate by 23% to INR9.7 as the company has used debt for funding capex rather than its own cash accruals. The interest on debt for projects is allowed to be capitalized. Stock is trading at 11.4x FY13 EPS and P/BV of 1.1 (RoE of 9.7%). Although its rich iron ore reserves are attractive, the company's operating inefficiencies and project execution are disappointing. Maintain Sell," says Motilal Oswal research report. 

Institutional holding more than 40% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment