Kolkata: Thanks to the infra push by the government and the force of rapid urbanization, the Indian steel sector seems poised for a structural revival. These tailwinds are translating into robust domestic demand. SAIL or Steel Authority of India Limited is consistently ranked as the top steel producer in the country. Domestic brokerage firm Emkay Global Financial Services has expressed bullish sentiment in a recent report on SAIL, which is expected to reap the dividends of improving prices, declining inventories and strong demand. All these are going to reflect in its operating profits (EBITDA) and cash flow. The stock is trading at a low valuation, and the brokerage has a target price of Rs 200.
Around 2:30 pm on Wednesday, the SAIL stock was trading at Rs 166.30, up Rs 6.12 or 3.82%. At this level, it signaled a nearly 7% appreciation in the past one month 35.44% in the past six months and 56.70% in the past one year. There is reason for increasing activity in this scrip. The current market rally isn’t just a price surge, but an indicator of a major shift, thinks analysts. Brokerage firm Emkay Global believes the company’s earnings are shifting to a new base, and its effects could be visible in the coming months.
Why is Emkay bullish?
According to brokerage reports, SAIL’s earnings are expected to improve sharply in the next few quarters. It forecasts the company’s operating profits (EBITDA) could reach Rs 7,000-7,500 per tonne, significantly higher than the Rs 4,500 per tonne level reported in Q3. This improvement is expected to be driven by lower inventories, better steel prices, and increased domestic demand.
Volume growth and margins
According to the report, the company’s volume growth is also expected to remain strong. Sales are estimated to be around 5.4 million tonnes in Q4, representing a quarterly increase of over 5%. Improved realisations and inventory reductions are expected to strengthen cash flow, and the company’s debt could decline by approximately 28% to about Rs 20,800 crore in FY26. Growth is also indicated in the medium term. The company is taking steps to improve product mix, coking coal blending and expand its IISCO plant. The plan is to reach a total capacity of 25.6 million tonnes by FY30, which could support both volume and margins.
Target price
Emkay thinks SAIL has an attractive valuation now. The stock currently trades at around 1.1 times price-to-book ratio, significantly lower than the sector average of 2.8 times. The brokerage maintains a ‘BUY’ rating on the stock and sets a target price of Rs 200, which implies an upside of approximately 20.48% from current levels.
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