Morgan Stanley has maintained an Underweight rating on Steel Authority of India Ltd (SAIL) with a target price of ₹90, despite a sharp outperformance in volumes and topline in Q4FY25.
SAIL reported steel sales volume of 5.3 million tonnes for Q4FY25, marking a 17% year-on-year and 20% quarter-on-quarter increase — significantly higher than Morgan Stanley’s estimate of 4.8 million tonnes. This led to revenue being 11% above expectations.
However, after adjusting for rail price revisions worth ₹690 crore related to FY24–FY25, Morgan Stanley noted that realizations were 3% below their forecast, at ₹55,000/tonne versus an estimate of ₹55,400/tonne. Even as raw material costs came in lower at ₹27,500/tonne (down ₹900 QoQ), aiding operational performance, adjusted EBITDA per tonne stood at ₹5,200 — 11% lower than their estimate.
SAIL’s reported EBITDA came in at ₹3,480 crore, 24% higher than expectations, but adjusted for one-offs, it aligned with estimates. Reported PAT stood at ₹1,180 crore, but the adjusted PAT excluding one-offs was ₹520 crore.
Morgan Stanley flagged that while operational leverage supported near-term margins, normalized earnings may not sustain the Q4 momentum, keeping their cautious stance intact.
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