Neutral on SAIL, target price Rs 39: Motilal Oswal

Motilal Oswal has given a neutral rating to SAIL with a target price of Rs 39. The share price moved up by 0.66 per cent from its previous close of Rs 37.90. The stock’s last traded price is Rs 38.15.

Steel Authority of India (SAIL) Ltd., incorporated in the year 1973, is a Large Cap company (having a market cap of Rs 15613.39 Crore) operating in Metals - Ferrous sector.

Financials
For the quarter ended 30-09-2020, the company reported a Consolidated sales of Rs 16925.49 Crore, up 86.66 % from last quarter Sales of Rs 9067.52 Crore and up 19.79 % from last year same quarter Sales of Rs 14128.96 Crore Company reported net profit after tax of Rs 362.62 Crore in latest quarter.

Investment Rationale
Despite an expected reduction in net debt by INR76b to INR457b over FY20– 22E, net debt/EBITDA would stay elevated at ~6.7x in FY21 and 4x in FY22. This remains a key concern as it makes the company vulnerable in the event of a downcycle in steel prices

Promoter/FII Holdings
Promoters held 75 per cent stake in the company as of Sept 30, 2020, while FIIs held 3.2 per cent, DIIs 13.7 per cent and public and others 8.1 per cent.