Buy SAIL; target of Rs 190: Motilal Oswal

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • Volume growth: SAIL reported a 5% YoY increase in sales volume, driven by inventory liquidation and improved market conditions.
  • NSR improvement: Blended steel NSR improved in Oct'26, reaching INR58,700/t for longs and INR61,700/t for flats.
  • Cost optimization: Management expects EBITDA/t to improve towards INR11,000-12,000 in 3Q/4QFY27, supported by stronger steel prices, better productivity, and operational efficiency improvements.
  • Capex plans: SAIL plans to spend ~INR1.2t on capex over FY27-FY31 to increase steel capacity from ~20mt to 35mt.

Thesis Validation Checklist

To validate the thesis, investors should watch for:

  • Volume growth: SAIL's ability to maintain volume growth momentum, driven by third-party agreements or captive expansion.
  • NSR trends: Stability or improvement in NSR, driven by demand recovery and pricing power.
  • Cost control: Management's ability to optimize costs, particularly imported coal costs, and improve operational efficiency.
  • Capex execution: SAIL's progress in executing its capex plans, including the expansion of its steel capacity and iron ore production.