SAIL: Good performance but… - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

SAIL: Good performance but…

Oct 30, 2002

Steel Authority of India Limited (SAIL), the public sector steel behemoth, announced encouraging September quarter results. The company has reported a 5% growth in its topline while its net losses have fallen by 52% YoY. What is commendable though, is the fact that the company has managed to post operating profits in 2QFY03. Operating margins of the company have gone up to 11% compared to -0.6% in the same period last year.

(Rs m)2QFY022QFY03Change
Net Sales 33,993 35,622 4.8%
Other Income 3,793 669 -82.4%
Expenditure 34,210 31,828 -7.0%
Operating Profit (EBDIT) (217) 3,793 -1852.1%
Operating Profit Margin (%)-0.6%10.6% 
Interest 4,022 3,349 -16.7%
Depreciation 2,842 2,813 -1.0%
Profit before Tax-3,287-1,699-48.3%
Extraordinary items - -  
Tax - 116  
Profit after Tax/(Loss) (3,287) (1,584)-51.8%
Net profit margin (%)-9.7%-4.4% 
No. of Shares 4,130.0 4,130.0  
Diluted Earnings per share*-3.2-1.5 
(* annualised)   

Topline growth seems to be the consequence of better export volumes and healthy realisations. Realisations which have been improving since the beginning of this year, have been holding ground since the last 2-3 months. Operationally, the company has managed to reduce its raw material and power costs considerably. This has led to a 7% drop in operational expenses. Operating margins have consequently improved.

Significant improvement in operating margins have helped the company pare down its losses in the September quarter. Considerably lower other income figures have however prevented SAIL from actually recording profits.

SAIL has equity investments of Rs 3.8 bn in its subsidiary company, the Indian Iron & Steel Co. Ltd., a sick company. Its revival proposal has recently been approved by the government, including employee compensation and the same is under detailed evaluation. SAIL has not provided for permanent diminution in the value of these investments, which it should have ideally done as per prudent accounting norms. Also, the company is treating a sum of Rs 865 m (towards employee family benefit scheme), as deferred revenue expenditure to be written-off in five years.

While SAIL's performance has been improving in the recent past, any adverse news on the realisations front is likely to severely impact its performance. Steel realisations have improved in the last 6-8 months and the company expects the prices to remain at the current levels for the full year. There is no doubt that performance in FY03 will be much better as compared to FY02, but there are too many negatives haunting the company. The stock currently trades at Rs 7 levels.

Equitymaster requests your view! Post a comment on "SAIL: Good performance but…". Click here!

  

More Views on News

SAIL Share Price Up by 5%; BSE METAL Index Up 2.7% (Market Updates)

Apr 13, 2021 | Updated on Apr 13, 2021

SAIL share price is trading up by 5% and its current market price is Rs 89. The BSE METAL is up by 2.7%. The top gainers in the BSE METAL Index is SAIL (up 5.3%). The top losers is HINDUSTAN ZINC (down 0.3%).

SAIL 2019-20 Annual Report Analysis (Annual Result Update)

Dec 10, 2020 | Updated on Dec 10, 2020

Here's an analysis of the annual report of SAIL for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of SAIL. Also includes updates on the valuation of SAIL.

SAIL Announces Quarterly Results (1QFY20); Net Profit Down 87.3% (Quarterly Result Update)

Aug 13, 2019 | Updated on Aug 13, 2019

For the quarter ended June 2019, SAIL has posted a net profit of Rs 688 m (down 87.3% YoY). Sales on the other hand came in at Rs 148 bn (down 6.8% YoY). Read on for a complete analysis of SAIL's quarterly results.

SAIL Announces Quarterly Results (4QFY19); Net Profit Down 42.6% (Quarterly Result Update)

Jun 3, 2019 | Updated on Jun 3, 2019

For the quarter ended March 2019, SAIL has posted a net profit of Rs 5 bn (down 42.6% YoY). Sales on the other hand came in at Rs 185 bn (up 8.6% YoY). Read on for a complete analysis of SAIL's quarterly results.

More Views on News

Most Popular

My Recent Recommendation Will Profit from the Global Supply Chain Crisis (Profit Hunter)

Mar 31, 2021

A tiny chemical company, started in the Licence Raj era, is a great example of a new wealth creating opportunity.

My Stock Trading Strategy (Fast Profits Daily)

Mar 31, 2021

In this video I'll show you exactly how I go about picking stocks for trading.

4 Stocks to Make Your Portfolio Immune to the Second Covid Wave (Profit Hunter)

Apr 6, 2021

Rather than predicting the market, successful investing is more about preparing well and placing your bets accordingly.

If the Market Falls, I Will Do This... (Fast Profits Daily)

Apr 1, 2021

What should you do if the market falls? In this video, I'll tell you what I will do.

India: Recovery Stalled by Vaccine Games? (The Honest Truth)

Apr 13, 2021

Ajit Dayal on how India's vaccine strategy will impact the markets.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

SAIL SHARE PRICE


Apr 13, 2021 (Close)

TRACK SAIL

SAIL - NIPPON STEEL COMPARISON

COMPARE SAIL WITH

MARKET STATS