Shares of Steel Authority of India Ltd (SAIL) gained over 7% on Tuesday, October 29, hitting a 52-week high of Rs 142.50 on the NSE, ahead of its Q2 FY25 earnings announcement. The rally came even as analysts anticipate a sharp decline in profitability, with muted steel pricing expected to weigh on margins.
Earnings Preview
According to a CNBC-TV18 poll, SAIL’s revenue from operations is projected to rise 0.6% year-on-year (YoY) to Rs 24,822 crore in the September quarter, compared to Rs 24,675 crore in the same period last year.
However, its operating profit is expected to decline 32% YoY to Rs 1,995 crore from Rs 2,913 crore, with EBITDA margins estimated to shrink to 8.04% from 11.81%.
The company’s net profit is likely to drop sharply by 85% YoY to Rs 136 crore, versus Rs 897 crore in the corresponding quarter last year.
Key Factors Impacting Performance
Analysts noted that SAIL’s volume growth may rise by around 10% YoY, supported by higher production and dispatches. However, this uptick is expected to be offset by weak pricing due to seasonal cuts and a larger proportion of long steel products in its portfolio.
The fall in steel realisations on a sequential basis is projected to impact profitability. On the positive side, lower coking coal costs, down by $10 per tonne sequentially, are expected to provide partial relief to margins.
Stock Performance
At 10:13 AM, shares of SAIL were trading at Rs 142.50, up 7.82% or Rs 10.34, compared to the previous close of Rs 132.16. The stock’s day range stood between Rs 133.20 and Rs 143.15, marking a new yearly high.
SAIL’s market capitalisation is Rs 5.88 lakh crore, with a P/E ratio of 19.38 and a dividend yield of 1.12%. The stock has gained 22.2% in the past six months, outperforming broader market indices.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information.