Steel Authority of India (SAIL IN) – Q3FY26 Result Update – Steel prices to drive earnings, but risks remain – HOLD
Published on 02 Feb 2026
SAIL has increased its FY27 capex guidance considering ISP expansion and it would further intensify in FY28/29E. Although SAIL will benefit from higher steel prices in near term, EBITDA expansion will also be limited due to sharp rise in coking coal prices which will hit in subsequent quarters. ISP expansion would drive volumes from FY30E provided timely execution. Most of the order placement for 4.5mtpa ISP project has been completed and groundwork has begun. Other debottlenecking and VAP projects at DSP (1mtpa TMT in H2FY28 and 1mtpa BF), RSP and BSP are on track. We expect SAIL to remain a play on steel prices as long-term volume growth would depend upon timely execution of planned capex. We raise our FY27/28E EBITDA estimates by ~9/12% on higher steel prices and a gradual tapering of coking coal costs but TP gets restricted on higher capex outflow and incremental debt. At CMP, the stock is trading at an EV of 5.5x/5.4x FY27/FY28E EBITDA which appear full considering rising leverage and weak execution pedigree. Maintain ‘Hold’ with revised TP of Rs151 (Rs141 earlier) giving same 5.5x Sep’27E EV/EBITDA.
