MOSL: SAIL (Neutral)-In-line: Margins continue to improve on strong pricing-Confluence of demand and volume growth
SAIL: In-line: Margins continue to improve on strong pricing; Confluence of demand and volume growth; Maintain Neutral
(SAIL IN, Mkt Cap USD4.7b, CMP INR79, TP INR82, 4% Upside, Neutral)
SAIL’s operating performance continues to improve on tailwind of strong demand and operating cost control. EBITDA per ton increased 13% QoQ to INR7,877 on increase in steel product spreads. EBITDA however declined 1% QoQ to INR25.7b (in-line) due to 13% QoQ decline in sales volume to 3.3mt on seasonal restocking.
- Steel realization increased 7% QoQ to INR48,631 per ton on strong demand.
- Product spreads (i.e. realn. – RM cost) increased sharply by 15% QoQ to INR28,993.
- EBITDA per ton increase was however lower due to QoQ lower volumes and increase in employee cost. Employee cost increased 8% QoQ (17% YoY) to INR22.2b. Operating parameters continue to show improvement.
- PAT increased 20% QoQ to INR7.2b (est. 5.4b) on lower interest and depreciation charge.
Steel Authority of India is principally engaged in the manufacturing iron and steel, both basic and special steels, for domestic construction, engineering, power, railway, automotive and defense industries and for sale in export markets. Co. steel products includes hot metal, crude steel, pig iron, cold rolled sheets and coils, galvanized sheets, electrical sheets, structural, railway products, plates, bars and rods, stainless steel and other alloy steels. Co. operates predominantly in India.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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