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Systematix Research Report
Steel Authority of India Ltd.’s Q2 FY24 consolidated Ebitda at Rs 38.7 billion (+427% YoY) versus Ebitda loss of Rs 27.6 billion in the previous quarter was 93% above our estimate.
The earnings beat was largely due to Rs 17.5 billion benefit relating to a revision in provisional rail prices for FY22. Ebitda adjusted for this benefit was Rs 21.2 billion versus our estimate of Rs 20 billion.
Ebitda/tonne came in at $98/tonne +347% YoY/-87/tonne in Q1 FY24. Steel production rose by 17%/9% YoY/QoQ to 4.8 million tonne and saleable steel sales also came in at 4.8 million tonne (+14% YoY and +24% QoQ), 2% above our estimates. Steel net sales realisation at Rs 61,900/tonne (-1% YoY, -1% QoQ) was 2% above our estimate.
Net debt was lower by Rs 48 billion QoQ and Rs 4 billion lower than the March 2023 level. Focus to remain on deleveraging as major growth capex plans are likely to materialise beyond FY26. H1 FY24 capex was ~Rs 20 billion largely towards maintenance activities, a consistent number in the absence of growth capex after recently concluding a decade-long capex cycle.
Capacity expansion plans beyond the current 19.1 million tonne are currently on the chalkboard and a gradual increase can be expected over the next two years largely through debottlenecking and technological modernisation of existing plants improving operational efficiency.
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