SAIL’s Q4FY21 efficiency got here in line. Key factors: (i) Ebitda/t shot up 3.2x y-o-y to Rs 14,145 as a consequence of each greater realisation and quantity; (ii) debt discount of 30% y-o-y in FY21 aided by working capital unlocking of Rs 64 bn; (iii) curiosity price plunged 41% y-o-y to Rs 5.4 bn. Administration has guided for 18.35mt of gross sales quantity and Rs 100 bn of additional debt discount in FY22e.
Going forward, we count on earnings to remain agency in H1FY22 owing to the sharp run- up in costs. Nevertheless, we count on the associated fee construction to inch up as effectively as a consequence of greater iron ore and manpower prices. All in all, we understand balanced risk-reward. Preserve Maintain with an unchanged TP of Rs 140 on 4.5x Q2FY23e Ebitda.
Sturdy efficiency and vigorous stability sheet clean-up
SAIL’s Q4FY21 efficiency met consensus estimates. Key factors: (i) Ebitda/t was up 3.2x y-o-y at Rs 14,145 as a consequence of each realisation (up 24% y-o-y) and gross sales quantity (up 16% y-o-y) uptick; (ii) working capital unlocking primarily as a consequence of a pointy discount in stock (March-21: 0.8mt) facilitated gross debt discount of ~Rs 180 bn from Might-21 peak of Rs 538 bn; iii) curiosity price slid 41% y-o-y to Rs 5.4 bn as the corporate each repaid/refinanced high-cost long-term debt; (iv) the corporate settled an entry tax dispute of Rs 1.7 bn with West Bengal by availing the amnesty scheme.
Going forward, the corporate expects FY22 gross sales quantity at 18.35mt. Taking cognisance of prevailing costs and outlook, we count on vital consensus upgrades. Our FY22e/FY23e Ebitda is 32%/15% forward of consensus at current.
Mounted and variable prices may inch up
We count on FY22/FY23e Ebitda/t at Rs 16,470/11,460, decrease than friends as: (i) FY22e manpower price is prone to be Rs 105 bn; and (ii) extra premium of twenty-two.5% on iron ore mined from Jharkhand for captive use is prone to inflate SAIL’s uncooked materials prices. Moreover, we see restricted benefit for the corporate from strong export costs as a consequence of its greater home focus.
Outlook: Pretty priced
Regardless of seemingly vital consensus upgrades, we see balanced risk-reward for SAIL as the good thing about greater costs is prone to be decrease than friends and value escalation is impending. Preserve ‘HOLD/SN’.