SAIL - Robust Q4 and Q1 numbers are expected

By Research Desk
about 11 days ago

In our Article carried here on 16th March, 2021, we stated as under-

"In Q4 of FY21, SAIL should report a sales of over 43 lakh tonnes, thus showing  a YoY growth of about 15%. FY 21 may see a growth of 5% at 149 lakh tonnes against 142 lakh tonnes of FY20."

SAIL has reported its Q4 FY21 sales at 42.7 lakh tonnes and 148.7 lakh tonnes in FY21, thus matching exactly with our estimates. Commentary by Chairman of SAIL has been very encouraging, which reads as under-

"After the difficult market conditions during the initial months of the financial year, the Company adopted focussed approach on improving its volumes, improving operational efficiencies, operating the facilities at optimum levels, deleveraging its balance sheet, reducing its inventory levels, etc. The multi- pronged strategy has helped us top the performances during the month, quarter as well as the year. The team effort by the SAIL employees helped in seizing the opportunity offered by the pick-up in the economic activities in the country especially the steel intensive sectors like infrastructure, construction, automobiles etc."

SAIL has also reduced its gross debt by Rs. 16,150 crore in FY 21, with borrowing now at Rs. 35,330 crore (provisional) as on 31st March 2021. Of this, term loan may be about Rs.20,000 crore, while rest may be working capital finance. With M cap of Rs. 35k crore, EV comes at Rs. 55k crore, giving EV per Million Tonne (MT) at Rs. 3,700 crore. JSW Steel has recently acquired 2.5 MTPA Bhushan Power  & Steel, for Rs. 20k crore, giving an EV at Rs. 8k crore per MT.   

Sales of 42.7 lakh tonnes in Q4 FY21 implies that SAIL is presenly operating at 114%  of its rated capacity, while same performance may be seen for Q1 FY22 as well. Hence, moolah time is seen for SAIL.

This is not a buy recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.

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