Steel Authority of India (SAIL IN) – Q1FY27 Result Update – Higher pricing aids Q1; capex execution remains key – ACCUMULATE
Published on 29 Jul 2026
SAIL continues to focus on structural cost reduction through operational improvements and higher utilization of captive resources. Mgmt. is targeting INR 2,000-3,000/t cost savings during FY27, while commissioning of IISCO in FY29E is expected to reduce variable costs by INR 3,000-4,000/t, translating into net savings of ~INR2,000/t after accounting for higher fixed costs. SAIL is also targeting to improve its product mix by increasing finished steel production, while monetization of captive iron ore fines is emerging as an incremental earnings driver. Although long product prices have corrected due to seasonal weakness, we expect production normalization, lower coking coal costs and revival in domestic demand in H2FY27 to support profitability. Timely execution of expansion projects remains the key as SAIL remains a pure play on pricing till then; while leverage would also increase as SAIL has stepped up its capex guidance. We tweak our EBITDA estimates for FY27/28E by +3/-5%, incorporating iron ore sales and lower volumes. At CMP, the stock is trading at an EV of 5.2x FY28E EBITDA. Maintain ‘Accumulate’ with revised TP of INR185 (INR203 earlier) giving same 5.5x Mar’28E EV/EBITDA.
