Neutral SAIL; target of Rs 80: Motilal Oswal

Motilal Oswal's research report on SAIL

Revenue was down 5%  YoY at INR291b in 4QFY23, and was in line with our estimate of INR292b. ASP for the quarter stood at INR62,245/t (down 5% YoY) against our estimate of INR 64,908/t. EBITDA was down 33% YoY at INR29b (11% miss), driven by higher coal prices, volatility in steel prices, higher royalty payment, volatility in forex, and higher employee cost, which adversely impacted the margins. EBITDA/t stood at INR6,226/t. APAT for the quarter was down 52% at INR10.7b and was 19% below our estimate of INR13b, primarily due to lower realizations, higher input cost, and higher depreciation, partially offset by lower interest expense and higher ‘other income’. SAIL continued its volume momentum and crude steel production was up 8% YoY at 4.95mt. Sales volume was marginally flat YoY at 4.7mt (in line). All the plants continue to perform well and all the integrated plants were EBIT positive.

Outlook

We largely retain our EBITDA estimates for FY24 and reiterate a Neutral stance on the stock with an unchanged TP of INR80, valuing the stock at 5x FY24 EV/EBITDA.

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