Neutral SAIL; target of Rs 130: Motilal Oswal

Motilal Oswal's research report on SAIL

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. This decline was primarily attributed to weak sales volume and lower realization during the quarter. EBITDA dipped 40% YoY/43% QoQ to INR13b, against our estimate of INR15b. EBITDA/t stood at INR3,111/t (vs. our est. of INR3,271) in 2QFY25. Adjusted net loss came in at INR4b vs. our loss estimate of INR0.4b. Crude steel production stood at 4.76mt (flat YoY/+2% QoQ). Sales volume stood at 4.1mt (-15% YoY/+2% QoQ). ASP for the quarter stood at INR56,191/t (-4% YoY/-6% QoQ).

Outlook

At CMP, SAIL trades at 5.2x EV/EBITDA on FY27E. We believe the stock is fully priced at current levels. We reiterate our Neutral rating on the stock with a revised TP of INR130 (premised on 6x EV/EBITDA on Sep’26 est.).