SAIL's ongoing capex is largely directed towards sustenance and debottlenecking projects as it concurrently progresses its future growth capex to take the capacity to 35 mt by 2031 from 20 mt currently.
NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Systematix Report
Steel Authority of India Ltd.'s earnings growth in the near to medium term is likely to be favored by strengthening steel prices and softer raw material costs. Implementation of 12% safeguard duty on HRC imports has relieved pricing pressure, especially for flat steel, the impact of which will be visible through H1 FY26.
We raise our FY26E/FY27E Ebitda by 8.2%/7.3% and keep the target multiple unchanged at 5.5x FY27E EV/Ebitda. We expect SAIL to deliver a 3%/19%/53% revenue/Ebitda/PAT CAGR over FY25-FY27E, which will be largely driven by peak capacity utilisation, lower raw material costs, and improved realisations.
We value SAIL at 5.5x FY27E EV/Ebitda with a target price of Rs 114/share, implying a 12% downside from current market price, after factoring in higher debt and ascribing NIL value to SAIL's CWIP.
The plateauing steel sales volume trajectory is SAIL's key limitation, accompanied by limited visibility on its long-term expansion strategy as it approaches its 35mt capacity target year of 2031.
We believe the 15mt expansion is unlikely in less than six years, as evidenced by its previous capacity expansion track record. These factors may restrict the stock's potential for re-rating relative to its peers, in our view. Maintain Hold.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
