Moneycontrol
Get App
Last Updated : Feb 14, 2013 03:44 PM IST | Source: Moneycontrol.com

Reduce SAIL; target of Rs 76: Angel Broking

Angel Broking is bearish on Steel Authority of India (SAIL) and has recommended reduce rating on the stock with a target of Rs 76 in its February 12, 2013 research report.

 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Angel Broking is bearish on Steel Authority of India (SAIL) and has recommended reduce rating on the stock with a target of Rs 76 in its February 12, 2013 research report.


“SAIL’s net sales declined by 0.9% yoy to Rs10,495cr (below our estimate of Rs11,730cr) During 3QFY2013,, mainly due to lower realizations, although they were partially offset by higher volumes. The company’s realizations stood at Rs35,168/tonne, compared to Rs37,326/tonne in 3QFY2012.”


“Staff costs and other expenditure increased 11.6% and 23.5% yoy to Rs2,081 and Rs1,753cr, respectively. The EBITDA therefore decreased by 28.0% yoy to Rs1,138cr; the EBITDA margin contracted by 408bp yoy to 10.8%. The company reported an exceptional item related to forex loss of Rs31cr in 3QFY2013, compared to exceptional loss of Rs466cr in 3QFY2012. Hence, the adjusted net profit declined by 53.1% yoy to Rs515cr (significantly below our estimate of Rs716cr) in 3QFY2013.”


“We expect SAIL’s operational and financial performance to be impacted by 1) inability to maintain/raise sales volumes amidst slower demand growth; 2) higher employee costs, and 3) delays/cost overruns in its brownfield expansion projects. SAIL is on the verge of expanding its saleable steel production capacity from 12.5mn tonne to 24.0mn tonne by FY2015. However, the current rich valuation of 6.5x FY2014E EV/EBITDA discounts its anticipated volume growth over FY2012-FY2016. Hence, we recommend a reduce rating on the stock,” says Angel Broking research report.


Non-Institutions holding more than 90% 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



Moneycontrol Ready Reckoner
Now that payment deadlines have been relaxed due to COVID-19, the Moneycontrol Ready Reckoner will help keep your date with insurance premiums, tax-saving investments and EMIs, among others.

First Published on Feb 14, 2013 03:43 pm
Sections
Follow us on