SAIL Q4 Results Review - Revenue Inline, Beat On Profitability On One-Off Gains: IDBI Capital

IDBI Capital Report

Steel Authority of India Ltd.’s Q4 FY24 revenue was in-line with our forecast. Revenue grew by 20% QoQ to Rs 279 billion led by volume growth of 20% QoQ. Ebitda increased by 62% QoQ to Rs 35 billion driven by arrears of Rs 15 billion towards railway price revision for FY23 and 9M FY24.

Ebitda/tonne increased by 36% QoQ to Rs7,621. SAIL aims to grow its sales volume by 11.6% to 19 mt in FY25. Further, SAIL will incur capex of Rs 6.3 billion in FY25 primarily towards sustenance capex, and also for initiating capex on the Burnpur plant.

We keep our FY25 Ebitda forecast unchanged and revise FY26 Ebitda forecasts upwards by 13%. We now value the stock at an enterprise value/Ebitda multiple of 6.5 times FY26E Ebitda given strong demand outlook for domestic steel sector led by infrastructure spending and robust volume guidance by SAIL for FY25.

We raise our target price to Rs 155 (earlier Rs 107) and upgrade our rating on the stock from Sell to Hold.

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