SAIL - Steel Authority of India Ltd. Share Price

Earnings Call Q&A Summary

Q1: Amit Lahoti from Emkay: "In Q1 FY26, we took a Rs. 1,000 crore inventory write-off due to falling coking coal prices. Was there any gain in Q3? How much could it be in Q4 at current prices?"

A1: I can confirm that in Q3, we had a positive impact of around Rs. 100 crores. For Q4, while we expect an upward positive impact on profitability and margins, we cannot provide an exact figure at this moment due to rising coal prices. However, estimates could suggest increases of 200-400 crores, but it's uncertain.

Q2: Amit Lahoti on expansion plans: "How much will our cost disadvantage narrow with incremental volumes from the IISCO expansion?"

A2: The IISCO project, estimated at Rs. 36,000 crores, is on track for completion in three years. After it's operational, we anticipate a significant boost in both production volumes and margins, enhancing profitability. Borrowing levels have been reduced to accommodate this expansion.

Q3: Pinakin Parekh from HSBC: "Can you quantify the price increases taken in December and January?"

A3: The market improved from mid-December. In January, we reflected a price increase of approximately Rs. 2,000-2,500 for long products and Rs. 3,300-3,500 for flat products, which will also influence February prices positively, coupled with rising coal costs.

Q4: Pinakin Parekh on coal costs in Q4: "What increase in coking coal costs do you anticipate in the 4th Quarter?"

A4: In January, the average imported coal price was Rs. 18,500, projected to rise to Rs. 19,700 in February, with another increase expected in March. Although prices are surging, I don't foresee them increasing beyond $251, given stabilization scenarios.

Q5: Vikas Singh from ICICI Securities: "What was the reason behind the reduction in employee costs on a sequential basis, and what's the outlook?"

A5: The reduction is due to adjustments from actuarial valuations related to gratuity components and discount rates. The wage rates remained stable at 11.5%. Since a wage revision cycle starts in January 2027, most impacts will be felt in FY27-28.

Q6: Vikas Singh on product mix: "Is there scope to reduce semi-finished products next year?"

A6: We're aiming to lower semis to around 10% of production through increased finished product output. We have ambitious plans including a 1-million-ton TMT bar mill at the Durgapur Steel Plant, expected to operational in about 18 months, facilitating further reductions in semi-products.

Q7: Pallav Agarwal from Antique Stock Broking: "Why was there a negative impact on the EBITDA bridge from volume increase?"

A7: The decline in saleable steel production, despite high hot metal output, led to the negative impact in EBITDA. Previous quarter excess inventory management affected this; however, we achieved significant sales growth overall, despite this concern.

Q8: Rashi Chopra from Citigroup: "What was the realization change sequentially from 2Q to 3Q?"

A8: In Q2, the average NSR was 48,836, dropping to 47,735 in Q3. Long product prices increased slightly while flat product prices fell. This slight decrease in NSR averages overall can be attributed to the market conditions and inventory management.

Q9: Sumangal Nevatia from Kotak Securities: "Can you provide a breakdown of FY26 and FY27 CAPEX guidance?"

A9: For FY26, the guidance is between Rs. 7,500 crores to Rs. 10,000 crores, while for FY27 it's Rs. 15,000 crores. Significant expenditures will go towards the IISCO expansion and other modernization projects.

These insights clarify key topics discussed during the earnings call, summarizing management's responses and guidance for the upcoming quarters.