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SAIL Q1FY23 Review: Mixed bag performance...

ICICIdirect Research 16 Aug 2022 DISCLAIMER

What's Buzzing:

Steel Authority of India (SAIL) reported a mixed set of numbers for Q1FY23 wherein topline came in line with our estimate, while EBITDA and PAT came in higher than our estimate. There was a fall in SAIL's sales volume in Q1FY23, both QoQ as well as on a YoY basis.

Context:

For Q1FY23, SAIL reported sales volume of 3.15 million tonne (MT), down 5% YoY and 33% QoQ, lower than our estimate of 3.65 MT. For Q1FY23, for standalone operations SAIL reported topline of Rs 24029 crore, broadly in line with our estimate of Rs 24638 crore. Standalone EBITDA for the quarter was at Rs 2301 crore compared to our estimate of Rs 1916 crore. Ensuing standalone net profit for the quarter was at Rs. 776 crore compared to our estimate of Rs 592 crore.

Our Perspective:

For the quarter, SAIL reported EBITDA/tonne was at Rs 7304/tonne compared to our estimate of Rs 5250/tonne. EBITDA margin for the quarter was at Rs 9.6% compared to our estimate of 7.8%. While SAIL’s EBITDA/tonne and EBITDA margin were steady, sharp QoQ fall in sales volume came in as a negative surprise for the quarter. The levy of export duty on steel exports in May 2022 was on the key reasons for the fall in SAIL's sales volume during the quarter. Despite muted sales volume during Q1FY23, SAIL has maintained its full year sales volume guidance of ~17 Million Tonnes (MT) for FY23E. Hence, going forward the trend in SAIL’s volume over the next 3 quarters remains a key monitorable.

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