Buy SAIL; target of Rs 200: Emkay Global Financial

Buy

Emkay Global Financial' research report on SAIL

We expect sharp earnings recovery for SAIL, with EBITDA/t rising to Rs7,000- 7,500 in the next two quarters (vs ~Rs4,500/t in Q3). This would be driven by inventory unwind and improved realization (QTD average at +11% for flats and +17% for longs vs Q3), partly offset by higher coking coal costs (+18% QoQ). We believe this will improve cashflow generation and drive deleveraging in FY26.

Outlook

Medium term, improved product mix (Durgapur mill by FY28), better coal blending, and the 4mt IISCO expansion are likely to help sustain Rs7,500- 8,000/t EBITDA at USD350/t steel-coking coal spread. At 1.1x P/B (vs sector at 2.8x), valuations are attractive; TP raised >14% to Rs200 from Rs175; BUY

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SAIL - 2502026 - emkay