Emkay Global Recommends Buying SAIL Stock, Targets Rs 200

Emkay Global Financial Research Report: SAIL

Key Highlights:

• Sharp earnings recovery expected for SAIL, with EBITDA/t rising to Rs7,000- 7,500 in the next two quarters (vs ~Rs4,500/t in Q3).
• Improved realization (+11% for flats and +17% for longs vs Q3) and inventory unwind to drive earnings recovery.
• Partly offset by higher coking coal costs (+18% QoQ).

Outlook:

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• Medium term, improved product mix (Durgapur mill by FY28), better coal blending, and the 4mt IISCO expansion to sustain Rs7,500- 8,000/t EBITDA at USD350/t steel-coking coal spread.
• Attractive valuations with a price-to-book ratio of 1.1x (vs sector at 2.8x).
• Target price raised by 14% to Rs200 from Rs175.
• Recommendation: BUY.