Accumulate Steel Authority of India; target of Rs 180: Prabhudas Lilladher
Moneycontrol • 3 days ago
Key Investment Pillars
- Recovery in steel prices: A sharp recovery in long steel prices over the last two months, coupled with expectations of strong demand, would support H2 margins.
- Expansion plans: SAIL plans to spend INR1.2tn over FY27-FY31E, targeting capacity expansion from 20mt to 35mt across four plants, which could drive long-term growth.
- Reducing dependence on imported coal: The expected commissioning of the Tasra coking coal mine in Jan'27 would help partially reduce dependence on imported coal over time, improving margins.
- Monetization of captive iron ore fines: SAIL is targeting 7-8mt of iron ore fines sales in FY27, which could generate significant profits and support earnings.
Thesis Validation Checklist
To validate the investment thesis, investors should monitor: steel pricing trends, coking coal costs, timely execution of capex plans, employee rationalization, and iron ore sales volumes. A sharp recovery in steel prices, successful commissioning of new projects, and reduction in dependence on imported coal would be positive signals, while delays in capex execution or a decline in steel prices could be negative.