Why SAIL's growth outlook is dim

Shares of Steel Authority of India Ltd (SAIL) have dropped 7.5% since the company reported weak September quarter (Q2FY25) results on Thursday.

- Ashish Agrawal

A downward revision in the FY25 sales volume guidance has likely added to the negative sentiment. The stock is now down 35% from its 52-week high of ₹175.35 on 22 May.

The problem is that earnings visibility is poor as the company may be staring at an extended period of muted growth with large expansion plans beginning only in H2FY26.

In Q2FY25, SAIL's Ebitda, adjusted for FY23 price revisions for sales to the railways, dropped 40% year-on-year (y-o-y) to ₹1,270 crore. This adjustment reflects SAIL's practice of booking railway sales at an ad hoc price, which is revised to actual costs. The quarter saw a fall in sales volumes and a 4% drop in realization per tonne. So, while raw material prices were lower, adjusted Ebitda per tonne was down 30% to ₹3,091.