Motilal Oswal is bearish on SAIL has recommended sell rating on the stock with a target price of Rs 30 in its research report dated December 09, 2016.
The sharp increase in coking coal prices (from USD80/t to USD300/t) will more than offset the recent price hikes announced by domestic steel mills. Demonetization will impact near-term steel demand, particularly the long product segment where SAIL has 50% exposure. SAIL’s exports are small, unlike JSW Steel. We expect margins to come under pressure on higher raw material cost and weak demand. While SAIL has shown impressive volume performance in past few quarters, structural issues of high operating cost remain. Maintain Sell with TP of INR 30/sh.
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