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Steel Authority of India Ltd (SAIL), the nation’s largest steel manufacturing entity, experienced a significant dip in its financial performance for the October-December quarter of 2023.
The state-owned company reported a 22% fall in its consolidated net profit, which stood at Rs 422.92 crore, compared to the net profit of Rs 542.18 crore recorded in the same quarter of the previous year. This decline was attributed to a decrease in total income, which fell to Rs 23,492.33 crore from Rs 25,140.16 crore year-on-year.
Despite the downturn in the third quarter, SAIL had previously shown robust growth with a 13% increase in consolidated revenue from operations at Rs 29,712 crore in Q2FY24, and a consolidated net profit of Rs 1,306 crore for the quarter ending September 30, 2023. The earlier profit was bolstered by strong domestic demand and reduced input costs.
However, the company’s performance in the stock market remained optimistic, with SAIL stock rallying 40% in three months and hitting a 52-week high. Experts advised short-term traders to buy the stock for a target of Rs 145 within the next 6-7 weeks.
Despite this, analysts offered a long-term average target price for SAIL shares at Rs 93.12, indicating a potential downside of -30.33% from the last traded price of Rs 133.65.
The Board of Directors declared an interim dividend of Re 1 per equity share for FY24, setting February 20 as the record date for the payment of this interim dividend. This decision came amidst a challenging global economic scenario that impacted steel prices and margins for steelmakers. Nonetheless, with the Indian government’s increased focus on capital expenditure in the infrastructure sector, there is an expectation of rising domestic steel consumption in the short to medium term.
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