Mehabe score: 5 G Factor: 5 Piotski Score: 4 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 5 and Piotski score of 4.
Description
Steel Authority of India Limited (SAIL) is one of the largest steel-making companies in India and one of the Maharatnas of the countrys Central Public Sector Enterprises. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials. SAIL manufactures and sells a broad range of steel products.(Source : Company Web-Site)
Main Points
Modernisation and Expansion plan
SAIL (Crude Steel) has a capacity of 21.4 MT and current utilization of 82% as of Dec 2020. #
SAIL is in the final stage of completion of its ongoing Rs 70,000-crore modernization and expansion programme. Under its Vision 2030 programme, the company plans to further add 29.6 mtpa in two phases by 2030Site:SAIL
Market Cap:
Rs 53,098 cr
Price:
129.0
Trading pe:
14.4x
Book-value:
98.4/share
Div yield:
0.78 %
Earning yield:
10.36%
Face-value:
10.0/share
52week high:
151.30
52week low:
28.35
Technical Analysis
Stock trades at 129.0, above its 50dma 112.43. It also trades above its 200dma 77.59. The stock remains bullish on techicals
The 52 week high is at 151.30 and the 52week low is at 28.35
Price Chart
P/E Chart
Sales and Margin
Strengths
–
Weakness
– Promoter holding has decreased over last quarter: -10.00%
-The company has delivered a poor sales growth of 6.02% over past five years.
– has a low return on equity of 4.33% for last 3 years.
-Contingent liabilities of Rs.37334.37 Cr.
-Debtor days have increased from 33.81 to 52.35 days.
Competition
– The industry trades at a mean P/E of 13.2x. APL Apollo Tubes trades at the industry’s max P/E of 49.43x. SAIL trades at a P/E of 14.4x
– Industry’s mean G-Factor is 6.0 while the mean Piotski score is 8.0. SAIL has a G-Factor of 5 and Piotski scoreof 4.
– Average 1 month return for industry is 1.7%. The max 1- month return was given by APL Apollo Tubes: a return of 14.11 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 23285.0 cr compared to Rs 16172.0 cr for period ended Mar 2020, a rise of 44.0%
Operating Profits reported at Rs 6154.0 cr for period ended Mar 2021 vis-vis 6436.0 for period ended Mar 2020 .
Operating Margins contracted -1336.8 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 8.4 compared to Rs 3.55 for previous quarter ended Dec 2020 and Rs 6.41 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 69114.0 cr for period ended Mar 2021 vis-vis sales of Rs 61664.0 cr for the period ended Mar 2020, a healthy growth of 10.8%. The 3 year sales cagr stood at 6.3%.
Operating margins expanded to 18.0% for period ended Mar 2021 vis-vis 17.0% for period ended Mar 2020, expansion of 100.0 bps.
Net Profit reported at Rs 4148.0 cr for period ended Mar 2021 vis-vis sales of Rs 2121.0 cr for the period ended Mar 2020, rising 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities: Rs 0.0 cr for period ended Mar 2021 vis-vis Rs -618.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 6.0% compared to 4.0% over the last 3 Years. – The stock has given a return of 329% on a 1 Year basis vis-vis a return of 13% over the last 3 Years. – The compounded sales growth on a TTM bassis is -3% vis-vis a compounded sales growth of 12% over the last 3 Years. – The compounded profit growth on a TTM basis is 6149% vis-vis a compounded profit growth of 45% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 4.32% vis-vis 4.16% for Dec 2020 – Public shareholding has risen for the period ended Mar 2021. The Mar 2021 public holding stood at 13.99% vis-vis 7.86% for Dec 2020
Conclusion
– – Promoter holding has decreased over last quarter: -10.00%
-The company has delivered a poor sales growth of 6.02% over past five years.
– has a low return on equity of 4.33% for last 3 years.
-Contingent liabilities of Rs.37334.37 Cr.
-Debtor days have increased from 33.81 to 52.35 days.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 112.43 and is trading at 129.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
