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CARE Ratings Limited has reaffirmed ratings of SAIL

Posted On: 2018-10-08 21:56:03

The reaffirmation of ratings of Steel Authority of India Limited (SAIL) continue to derive strength from the majority ownership by Government of India (GoI) and its established position as one of the largest integrated steel producers in India with captive iron ore mines. The ratings also favorably factors in SAIL's geographical diversity of sales with strong marketing network, healthy mix of value-added product and moderate capital structure. The ratings take cognizance of the improvement in the operational and financial performance during FY18 (refers to the period April 1 to March 31) and Q1FYI9 (refers to the period April 1 to June 30) characterized by improvement in volume growth and average sales realizations on account of improved industry scenario. The ratings strengths are, however, tempered by the susceptibility of the SAIL's operating margins to volatility in input cost particularly coking coal cyclicality inherent in the steel industry and risks associated with the implementation of the large ongoing Modernization & Expansion (M&E) project of the company.

Going forward, SAIL's ability to achieve the envisaged revenue and profitability while keeping control on the input costs particularly coking coal shall remain the key rating sensitivity. Also ramping up of operations from enhanced capacity and complete the ongoing M&E plan within the time and cost estimate shall remain the key rating sensitivities.

Outlook: Stable

The revision in the rating outlook from 'Negative' to 'Stable' factors CARE's expectation of SAIL's PBILDT/Tonne to improve going forward. The PBILDT improvement is likely to be driven by healthy volume growth and firm average sales realizations coupled with range bound raw material prices particularly coking coal. Further. SAIL is also likely to benefit from production ramp up from newly commissioned facilities. manpower rationalization and enhanced techno economic parameters.

Shares of STEEL AUTHORITY OF INDIA LTD. was last trading in BSE at Rs.64.5 as compared to the previous close of Rs. 65.9. The total number of shares traded during the day was 1387487 in over 4948 trades.

The stock hit an intraday high of Rs. 66.5 and intraday low of 62.55. The net turnover during the day was Rs. 89801225.

Source: Equity Bulls

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