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SAIL: Operating Margins Offer Hope; Bottomline Languishes in Red - Views on News from Equitymaster
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  • Nov 21, 2017 - SAIL: Operating Margins Offer Hope; Bottomline Languishes in Red

SAIL: Operating Margins Offer Hope; Bottomline Languishes in Red
Nov 21, 2017

SAIL has announced the second quarter results of the financial year 2017-2018 (2QFY18). While the topline increased by 21.3% YoY, the bottomline reported a loss Rs 5.39 billion during the quarter.

Performance summary:
  • Income from operations increased by 21.3% YoY during 2QFY18. This is on the back of an increase in sales realisation which increased by 24% YoY. This was partly offset by the sales volumes, which declined marginally by 1.9% YoY.
  • The company registered an EBITDA (operating profit) of Rs 9.1 billion during the quarter primarily because of lower coking coal cost. The company witnessed a significantly better product mix with a higher proportion of value-added products from its Bokaro plant. Operating profit of Bhilai Steel Plant improved significantly to Rs 3 billion. while Rourkela and Bokaro plants reported a profit of Rs 568 million and Rs498 million, respectively after several consecutive quarters of losses.
  • Other income declined by 28.7% YoY. Depreciation and finance cost increased by 14.5% YoY and 6.8% YoY respectively on the back of capitalization of assets and higher borrowings.
  • Subsequently, the company reported a net loss of Rs 5.39 billion during the quarter. The company has provided for the liability of Rs 3.3 billion pertaining to the SC judgement in the Odisha mining case and VRS compensation of Rs 2.1 billion partly offset by write back of excess provision of Rs 2.4 billion on account of DMF.

    Financial Snapshot (Standalone)
    (Rs m) 2QFY17 2QFY18 Change 1HFY17 1HFY18 Change
    Total Income 112,256 136,174 21.3% 204,637 251,970 23.1%
    Total Expenses 111,142 127,032 14.3% 201,185 243,666 21.1%
    Operating profit (EBITDA) 1,114 9,143 720.5% 3,452 8,304 140.5%
    Operating profit margin (%) 1.0% 6.7%   1.7% 3.3%  
    Other income 682 486 -28.7% 1,574 1,379 -12.4%
    Interest 6,028 6,435 6.8% 11,968 12,313 2.9%
    Depreciation 6,659 7,622 14.5% 12,661 14,569 15.1%
    Profit before tax & exceptional items -10,890 -4,428 59.3% -19,602 -17,199 12.3%
    Exceptional Item -1,640 -2,975   -2,182 -3,077  
    Tax -5,215 -2,013   -9,114 -6,871  
    Net Profit -7,316 -5,391   -12,671 -13,404  
    Net profit margin (%) -6.5% -4.0%   -6.2% -5.3%  
    No. of shares (m)         4131  
    Basic diluted earnings per share (Rs) ^         -7.0  
    P/E ratio (x) *         N.A  

    * On trailing 12 month basis

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