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Last Updated : Dec 13, 2016 03:18 PM IST | Source: Moneycontrol.com

Sell SAIL; target of Rs 30: Motilal Oswal

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.

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Motilal Oswal's research report on SAIL

SAIL’s 2QFY17 performance was impacted by seasonally weak realization. EBITDA of INR 1.1b (-52% QoQ) came in below estimate of INR 4.3b due to lower than-expected realization. Net adjusted loss after tax increased 26% QoQ to INR 6.4b on higher depreciation. Net debt was unchanged QoQ at INR 360b.

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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First Published on Dec 13, 2016 03:18 pm