SAIL Shares Dip 2% as Q2 Profit Slumps 49% – What’s Driving the Decline?
Shares of Steel Authority of India Limited (SAIL) fell nearly 2% in early trade after the company reported a sharp 49% year-on-year (YoY) decline in standalone net profit for Q2 FY24. The stock traded at ₹89.25 on the BSE as investors reacted to weak earnings and mixed brokerage sentiments.
SAIL Q2 FY24 Financial Highlights
- Profit After Tax (PAT): ₹1,305.73 crore (down 49% YoY)
- Revenue: ₹29,712 crore (down 3.4% YoY)
- EBITDA: ₹3,192 crore (down 32% YoY, up 14% QoQ)
The decline was driven by lower steel prices, high input costs (coking coal), and sluggish demand in some segments. However, sequential (QoQ) performance showed slight improvement, with revenue rising 4%.
Brokerage Reactions – Should You Buy, Hold, or Sell SAIL?
1. Kotak Institutional Equities – ‘Reduce’ (Target: ₹85)
- Weak realizations due to cheaper imports.
- Margin pressure expected from high coking coal costs.
2. ICICI Securities – ‘Hold’ (Target: ₹92)
- Performance in line with estimates.
- Expects demand recovery in H2FY24 due to infrastructure push.
3. Motilal Oswal – ‘Neutral’ (Target: ₹95)
- Cautious due to volatile steel prices.
- Margins may stabilize if input costs ease.
4. Nuvama – ‘Buy’ (Target: ₹115)
- Attractive valuations after correction.
- Strong operational performance and volume growth.
Key Challenges for SAIL
- Falling Steel Prices: Global slowdown and import competition.
- High Coking Coal Costs: Squeezing profitability.
- Mixed Demand: Strong infrastructure but weak auto/durables.
Future Outlook – Will SAIL Recover?
✅ Government Infrastructure Push (pre-election spending)
✅ Export Opportunities (Europe, Middle East demand)
✅ Cost Control & Debt Reduction Efforts
Investor Takeaway – Buy the Dip or Wait?
- Long-term investors: SAIL could benefit from India’s steel demand growth.
- Short-term traders: Watch steel price trends and global cues.
Bottom Line: SAIL faces near-term headwinds, but long-term prospects remain tied to government policies and steel demand revival. Brokerages remain split—stay updated on earnings and sector trends before investing.
