SAIL - Steel Authority of India Ltd. Share Price

In the Q4 and FY '25 earnings call for Steel Authority of India Limited (SAIL), management provided a cautiously optimistic outlook amid a challenging global economic scenario. They noted that the International Monetary Fund (IMF) projected a global GDP growth rate of 2.8% for 2025 and emphasized the Indian economy's resilience, with a GDP growth estimate of 6.5% for FY '24-'25 and 6.7% for FY '26-'27.

SAIL reported a crude steel production of 19.17 million tons, with a sales volume growth of around 5% to 17.9 million tons, marking the best annual sales performance in the company's history. The turnover stood at approximately INR 1,02,000 crores, with EBITDA of INR 11,644 crores, PBT of INR 3,009 crores, and PAT of INR 2,148 crores for FY '25.

Management expects continued demand growth for steel driven by strong infrastructure investments in India. They highlighted specific targets, including a crude steel production of over 20 million tons for FY '26 and a ambitious capex of INR 7,500 crores for FY '26 aimed at enhancing production capacity to 35 million tons by 2030. Aiming for enhanced operational efficiencies, they reported a cost reduction of around INR 650 crores due to improvements in technological parameters.

Furthermore, management indicated a positive outlook on pricing, expressing hope for higher net sales realization (NSR) post-monsoon, and expected a decline in coking coal costs, stabilizing at approx. INR 18,500 per ton in Q4 FY '25.

Overall, the company remains focused on sustainability through decarbonization and efficiency improvements, signaling optimism for future profitability and growth in a recovering market environment.

Here are the major questions and their corresponding answers from the Q&A section of the Steel Authority of India Limited earnings transcript:

Question 1: "If you could indicate a timeline when we are going to start spending capex? Have you secured Board and government approval for the expansion plan?"

Answer: Yes, we plan to expand from our current capacity of around 20 million tons to 35 million tons by 2030. We have begun tendering activities at IISCO Steel Plant. Initial investments will start in FY '25-'26, with major investments beginning from FY '26-'27 as we receive necessary approvals.

Question 2: "Could you provide specific guidance for FY '26 for capex?"

Answer: We have decided on a capex of INR 7,500 crores for FY '25-'26. This will be allocated across various projects in stages as we progress in our expansion efforts.

Question 3: "What was the mix of the volume in terms of finished and semi-finished in Q4?"

Answer: In Q4, the total saleable steel production volume was 5.33 million tons, which included finished volume at 4.09 million tons and semi-finished at around 0.48 million tons.

Question 4: "Could you give guidance for the NSR and costs?"

Answer: We expect NSR to improve following the safeguard duty implementation, particularly post-monsoon as demand grows. Currently, coking coal prices are stable, with a slight expected increase from current levels.

Question 5: "What is your expectation for employee costs for FY '26?"

Answer: We expect a further reduction in employee costs by around INR 400 to INR 500 crores due to ongoing natural separations and operational efficiencies.

Question 6: "Could you share thoughts on volumes and what are your targets for FY '26?"

Answer: For FY '26, we anticipate crude steel production to exceed 20 million tons, targeting sales above our expected production figures, with a focus on reducing semi-finished products to 10-12%.

Question 7: "How will the debt position play out over the next two to three years?"

Answer: Currently, our debt stands at approximately INR 26,700 crores. We aim to reduce it further while utilizing internal accruals to fund our expansion and maintain a good debt-to-equity ratio going forward.

Question 8: "What are your thoughts regarding the NSR and market dynamics?"

Answer: We're observing a cyclical improvement in prices for both long and flat products driven by infrastructure demand. We expect positive price dynamics in FY '26, enhancing our revenue outlook.

These responses outline Steel Authority's strategic plans, financial guidance, and operational expectations moving forward.