Home
>
Articles
>
SAIL Q2 results: 10x rise in profits, beats estimates

SAIL Q2 results: 10x rise in profits, beats estimates

Last updated: 02 Nov, 2021 | 04:16 pm

SAIL Quarterly Results: SAIL Financial Results Q2 (2021-22) Review & More

Most brokerages have maintained a bullish view on SAIL (Steel Authority of India) after the company reported a strong set of numbers in Jul-Sep 21 period. Here are the highlights from the earnings, and the outlook going forward. 

Consolidated Net profit soars: Domestic steel giant SAIL has reported a 10-fold rise in its consolidated net profit at Rs 4,338.75 crore for the Jul-Sep 21 period, backed by strong improvement in realizations. The company had posted Rs 436.52 crore net profit in the year-ago quarter.

Total income rises: SAIL also reported an exceptional increase in the consolidated income. During Q2FY22, the income increased to Rs 27,007.02 crore from Rs 17,097.57 crore in the corresponding quarter last financial year. Analysts had earlier anticipated a total income of Rs 25,000 crore

EBITDA and margin: The company’s standalone EBITDA for the quarter stood at Rs 7,017 crore, up 269% YoY. The margin grew by 1493 bps YoY but down 564 bps QoQ and at 26.2%. Higher coking coal prices weighed on the margins during the quarter. 

Expenses - The company expenses increased to Rs 21,289 crore against Rs 16,733.63 crore in the year-ago period. The company produced 4.468 million tonnes (MT) of crude steel during the quarter under review and sold 4.280 MT of steel.

Dividend - The board has declared an interim dividend of Rs 4 per share for the current fiscal year.

SAIL quarterly results in Jul-Sep 21: Review

SAIL has reported a strong set of numbers for the Jul-Sep 21 period, thanks to improved demand from construction and infrastructure segments (65% of output) which led to strong offtake during the quarter. The company has also strengthened its balance sheet during the period. SAIL’s net debt has reduced,  helped by a surge in cash from operations. Strong steel pricing environment and tighter working capital management aided the growth in EBITDA. However, the margins came under pressure due to higher coking coal prices. 

Going forward, the company has shared its vision of becoming a 50-MTPA company in the medium term. SAIL has maintained its sales volumes guidance in the range of 16.5 MT -17 MT (H1FY22: 7.61 MT) in FY22 and 18 MT in FY23. SAIL is confident of a strong demand outlook, based on the economic recovery in the second half of FY22. The export markets remain favourable with lower net exports from China on the back of production cuts. This should help the company to continue to post strong performance going forward.

SAIL financial results: Brokerage take

Following the earnings, Dolat Capital has maintained a 'Buy' rating with a target price of Rs 270. After surprising the markets with solid Rs 7,800 crore deleveraging in Q2, management sounded confident of being able to pay down its entire debt by first quarter FY23-end, noted Dolat. However, Dolat pointed out that there are headwinds of higher coking coal costs in Q3 and Q4. At this level of costs, steel companies would be compelled to announce price hikes. 

Systemix said that SAIL would likely reduce net-debt further by Rs 25,000 crore over the next 12-18 months, even after a likely dividend of Rs 23 per share based on a mandated 30% payout for public sector undertakings. This provides a strong downside support, and a de-leveraged balance sheet would drive stock re-rating. However, the biggest risk to SAIL would be the government's measures to change it into a milch cow through levies, as has been the case with several other PSUs in India. It has maintained a  'Buy' rating, and upgraded target price to Rs 182 per share from Rs 177 earlier. 

Domestic firm Prabhudas Lilladher noted that sentiments on Chinese demand turned negative across the major steel consuming sectors. Given the restricted supplies of Chinese steel in its domestic and export markets, global steel prices are expected to remain elevated, further supported by all-time high coking coal prices. Given higher coking coal prices, margins were expected to soften. The research house has maintained an  'Accumulate' rating but cut target price to Rs 155 from the earlier Rs 170. SAIL shares closed Tuesday’s session at Rs 122.30 on NSE.

We are a SEBI registered investement advisor
Mutual Funds watchlist
aditya birla sun life flexi cap fund growth direct plan|ABSL low duration fund direct growth|axis bluechip fund direct growth|axis capital builder fund series 4|axis balanced advantage fund direct growth|axis equity saver fund direct growth|axis multicap fund direct growth|axis global innovation fund of fund direct growth|axis long term equity fund growth NAV|axis quant fund direct growth|axis small cap fund direct growth|axis value fund direct growth|baroda dynamic equity fund direct growth|BOI AXA bluechip fund|canara robeco flexi cap fund direct growth|canara robeco small cap fund direct growth|canara robeco value fund direct growth|DSP quant fund direct|franklin india smaller companies fund direct growth|HDFC arbitrage fund direct growth|HDFC balanced advantage fund direct growth|HDFC developed world index fund NAV|HDFC flexi cap fund direct growth|HDFC housing opportunities fund direct growth|HDFC hybrid equity fund direct growth|HDFC nifty 50 index fund|HDFC index fund sensex plan|HDFC mid cap opportunities direct plan growth|HDFC multi asset fund direct growth|HDFC small cap fund direct growth|HDFC top 100 fund direct growth|HSBC midcap fund direct growth|ICICI prudential balanced advantage fund|ICICI bluechip fund direct growth NAV|ICICI prudential commodities fund direct plan growth|ICICI nasdaq 100 fund direct growth|ICICI nifty next 50 index fund direct growth|ICICI small cap fund direct growth|ICICI prudential technology direct plan growth calculator|ICICI ultra short term fund direct growth|IDBI india top 100 equity fund direct growth|IDBI small cap fund direct growth|idfc us equity fund of fund direct growth|kotak short term fund direct growth|kotak emerging equity fund direct growth|kotak multicap fund direct growth|kotak global innovation fund of fund NAV|kotak gold fund direct growth|kotak savings fund direct growth|kotak small cap fund direct growth|L&T emerging businesses fund direct growth|mirae asset large cap fund direct growth|mirae asset midcap fund|motilal oswal nasdaq 100 fund of fund|navi nifty 50 index fund direct growth|nippon india banking and financial services fund direct growth|nippon banking fund direct|nippon india flexi cap fund NAV|nippon india large cap fund direct growth|nippon india pharma fund direct growth|nippon india small cap fund direct growth|PGIM small cap fund direct growth|quant flexi cap fund direct growth|quant infrastructure fund direct growth|quant tax plan direct plan growth|SBI bluechip fund direct growth|SBI corporate bond fund direct growth|SBI equity minimum variance fund direct growth|SBI flexi cap fund|SBI magnum children's benefit fund investment direct plan|SBI nifty index fund direct growth|SBI small cap fund direct growth|SBI technology opportunities fund direct growth|tata banking and financial services fund direct plan growth|tata business cycle fund|tata technology fund direct growth|tata equity pe fund direct growth|tata ethical fund direct growth NAV|tata focused fund direct growth|tata index fund nifty direct plan|tata india tax savings fund direct plan growth|UTI focused equity fund direct growth|UTI nifty index fund direct growth NAV|UTI nifty 50 index fund direct growth