SAIL Q2 Results Review - Stronger Volumes Lead To Profitability Beat: IDBI Capital

IDBI Capital Report

Steel Authority of India Ltd.’s Q2 FY24 profitability was above our and street expectation. Its sales increased by 13% YoY to Rs 297 billion led by volume growth of 13% YoY to 4.77 million tonnes.

Also, profitability remained strong on a QoQ basis led by stronger realizations. Ebitda jumped by 135% QoQ to Rs 39 billion as Ebitda/tonne increased by 91% QoQ to Rs 8,111.

SAIL's adjusted net profit increased over seven times QoQ to Rs 12 billion. The company targets 19 million tonnes production target for FY24 – which is optimistic in our view.

We raise our FY24/FY25 Ebitda forecasts by 5%/10% given stronger than expected Ebitda reported in Q2 FY24.

We continue to value the stock at an enterprise value/Ebitda multiple of three times FY25E earnings and raise our target price to Rs 83 (earlier Rs 81) but maintain our 'Sell' rating on the stock.

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