Buy Steel Authority of India; target of Rs 150: Sharekhan

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26 Aug, 2025 12:21

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Sharekhan's research report on Steel Authority of India

Q3FY22 consolidated adjusted operating profit of Rs. 3,902 crore (down 45% q-o-q) was in line with our estimate as margins and volume met expectations. Reported operated profit of Rs. 3,402 crore is adjusted for a provision of Rs. 500 crore for employee retirement benefit. Blended EBITDA margin declined sharply by 38% q-o-q to Rs. 10,161/tonne (in-line) due to a steep Rs. 10,000/tonne q-o-q rise in coking coal prices offsetting a 5% q-o-q improvement in blended realisations (above estimates). Decline of 10% q-o-q in saleable steel sales volumes to 3.8 mmt was on expected lines. Management guided for robust 25% q-o-q rise in Q4FY22 sales volume to 4.8 mt and an uptick in steel prices, which would improve profitability in Q4FY22 offsetting further increase in coking coal prices. Further, SAIL slashed debt by 15% q-o-q to Rs. 19,128 crore but now aims to become net debt-free by end of FY23E versus Q1FY23 earlier.

Outlook

We maintain a Buy on SAIL with a revised PT of Rs. 150 (reflecting an earnings cut to factor wage cost guidance), noting inexpensive valuation of 2.8x its FY2023E EV/EBITDA and 0.7x FY2023E P/BV.

More Info on Steel Authority of India

At 15:58 hrs Steel Authority of India was quoting at Rs 97.35, down Rs 1.40, or 1.42 percent.

It has touched an intraday high of Rs 99.30 and an intraday low of Rs 97.00.

It was trading with volumes of 1,718,154 shares, compared to its thirty day average of 3,181,512 shares, a decrease of -46.00 percent.

In the previous trading session, the share closed up 0.51 percent or Rs 0.50 at Rs 98.75.

The share touched its 52-week high Rs 151.10 and 52-week low Rs 63.30 on 10 May, 2021 and 19 February, 2021, respectively.

Currently, it is trading 35.57 percent below its 52-week high and 53.79 percent above its 52-week low.

Market capitalisation stands at Rs 40,210.66 crore.

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