Buy SAIL; target of Rs 175: Motilal Oswal

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Motilal Oswal's research report on SAIL

SAIL continues to reap the benefits of higher steel prices as it recorded its highest ever quarterly EBITDA of INR65.3b (+7% QoQ), despite volumes declining by 24% QoQ. EBITDA/t was the highest ever at INR19,728/t. Net debt declined further to INR311b (v/s INR367b in Mar'21). We expect SAIL to further reduce its debt by INR44b to INR267b at the end of FY22. We broadly maintain our FY22E/FY23E estimate.

Outlook

We value the stock at 5x FY23E EV/EBITDA at INR175/share, implying a target P/B of 1.1x (v/s its historical average of 0.7x). At the CMP, the stock is trading at 3.3x FY22E EV/EBITDA. We reiterate our Buy rating.

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