1. At a Glance
Steel Authority of India (SAIL) reported Q1 FY26 net profit of ₹685 Cr, revenue ₹25,922 Cr, OPM at 11%. Margins improved but volumes flat. Stock trades at 0.92x book value and P/E 17.7x. Contingent liabilities ₹42,242 Cr loom like a grey cloud.
2. Introduction with Hook
Imagine an old warhorse trying to run a Formula 1 race. That’s SAIL—India’s Maharatna steelmaker balancing decades-old plants with modern market expectations. Q1 FY26 was solid, but investors are still asking: “Can a PSU actually sprint?”
3. Business Model (WTF Do They Even Do?)
- Core: Makes steel (flats, longs, special steels).
- Plants: 5 integrated + 3 special steel plants near raw material hubs.
- Clients: Infrastructure, railways, construction, auto.
- USP: Backed by GOI (65% stake) and has “Maharatna” status.
- Punchline: “SAIL takes iron ore, adds some government pride, and ships steel.”
4. Financials Overview
- Q1 FY26 Sales: ₹25,922 Cr (-0.6% YoY)
- EBITDA: ₹2,769 Cr (Margin 11%)
- PAT: ₹745 Cr (+261% YoY)
- FY25 PAT: ₹2,372 Cr (-23% YoY)
Margins bounced back this quarter, but long-term growth is as slow as a Kolkata tram.
5. Valuation
- P/E: 17.7x (cheap vs JSW’s 49x, but PSU discount applies).
- CMP/BV: 0.92x – stock is trading below book.
- Fair Value Range: ₹120 – ₹150.
“If you like safe bets and dividends, this is your chai. If you want multi-baggers, look elsewhere.”
6. What’s Cooking – News, Triggers, Drama
- Audit qualifications on entry tax and DVC advances.
- ₹42,000+ Cr contingent liabilities (ouch).
- New leadership appointments at Burnpur & Durgapur.
- No major capex drama but global steel prices remain volatile.
“SAIL doesn’t do gossip—only government notifications.”
7. Balance Sheet
| (₹ Cr) | FY24 | FY25 |
|---|---|---|
| Borrowings | 36,323 | 36,934 |
| Net Worth | 57,102 | 58,906 |
| Total Assets | 1,41,022 | 1,36,371 |
Takeaway:
Debt is stable. Equity growing slowly. Asset-heavy, PSU-style.
8. Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating CF | -5,290 | 2,911 | 9,914 |
| Investing CF | -3,371 | -4,261 | -5,268 |
| Financing CF | 8,587 | 1,362 | -4,424 |
Positive operating cash flow FY25; but investments continue to eat cash. Financing outflows show debt repayments.
9. Ratios – Sexy or Stressy?
| Metric | Value | Comment |
|---|---|---|
| ROE | 4.5% | Low. Needs a booster. |
| ROCE | 6.7% | Meh. |
| D/E | ~0.6x | Safe for a PSU. |
| OPM | 11% | Decent comeback. |
10. P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 1,04,448 | 1,05,378 | 1,02,479 |
| EBITDA | 8,038 | 11,149 | 10,646 |
| PAT | 2,177 | 3,067 | 2,372 |
Topline stagnant. Profits volatile. Classic steel cycle.
11. Peer Comparison
| Company | P/E | ROE | CMP/BV |
|---|---|---|---|
| JSW Steel | 49.6x | 4.9% | 1.6x |
| Tata Steel | 60.7x | 3.6% | 1.2x |
| Jindal Steel | 28.5x | 7.8% | 2.2x |
| SAIL | 17.7x | 4.5% | 0.9x |
Observation:
Valuation cheap, but growth uninspiring. PSU tag keeps a lid on multiples.
12. Miscellaneous – Shareholding, Promoters
- Promoter (GOI): 65%
- FII: 3.7% (falling)
- DII: 17.3% (rising)
- Public: 14%
PSU control = stability + bureaucracy.
13. EduInvesting Verdict™
SAIL is the classic PSU steel story: solid assets, low valuation, good dividends, but slow growth and regulatory baggage. Q1 FY26 shows margins improving, but long-term re-rating needs better profitability and reduced liabilities.
Final Word:
“A strong metal base, but don’t expect it to turn into stainless returns overnight.”
Written by EduInvesting Team | 26 July 2025
Tags: SAIL, Q1 FY26 Results, Steel PSU, Contingent Liabilities, EduInvesting Premium
