Reiterate ‘purchase’ on SAIL; count on volumes to submit 9% CAGR

SAIL recorded its highest ever quarterly volumes of 4.27 mt (provisional) in 4QFY21 (+14% YoY; +3% QoQ).

SAIL, in a press launch, knowledgeable that it has lowered its gross debt by Rs 161 billion (30%) in FY21 to Rs 353 billion (excluding lease liabilities). We estimate SAIL’s 4QFY21-end gross debt at Rs 380 billion, together with lease liabilities. In 4QFY21, the corporate has lowered its gross debt by Rs 86.3 billion (23% QoQ).

SAIL recorded its highest ever quarterly volumes of 4.27 mt (provisional) in 4QFY21 (+14% YoY; +3% QoQ). Consequently, it additionally achieved its highest ever annual gross sales of 14.87 mt in FY21 (+4% YoY). Crude metal manufacturing rose 6% YoY / 4% QoQ to 4.55 mt. Crude metal manufacturing stood at 15.21 mt (down 6% YoY) because of Covid-led lockdowns.
We count on SAIL’s volumes to submit a 9% CAGR to 17.5 mt over FY21–23E, pushed by improved demand and rising capability utilisation. We estimate SAIL’s internet debt to say no by Rs 233 billion (Rs 56/share) to Rs 305 billion (Rs 74/share) over FY20–23E – on the again of a 36% EBITDA CAGR to Rs 145 billion over FY20–22E. At CMP, the inventory is buying and selling at 4.5x FY22E EV/EBITDA and 0.5x P/B. We worth the inventory at 5x FY22E EV/EBITDA at Rs 104/share, implying goal P/B of 0.8x (historic common of 0.7x). Reiterate ‘purchase’.

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