SAIL hits 20-mth high, gains 4%; Emkay Global lifts TP, expects 21% upside

Steel Authority of India (SAIL) jumped 3.9 per cent to ₹167.20, the highest level since June 3, 2024, on the National Stock Exchange (NSE) today.

Steel Authority of India (SAIL) share price today

Steel Authority of India (SAIL) share price rose 4 per cent to an over one-year high on Wednesday. The scrip jumped 3.9 per cent to ₹167.20 (a 20-month high), the highest level since June 3, 2024, on the National Stock Exchange (NSE).

 

As of 2:44 PM, SAIL share price was quoting at ₹164.15, up 2.48 per cent, as compared to 0.17 per cent advance in the Nifty 50 index. The counter saw trades of around 57.2 million shares on the NSE so far. 

 

In the last 12 months, the SAIL share price rose 56.4 per cent, as against a 13 per cent advance in the Nifty 50 index. 

 

 

Why did Steel Authority of India (SAIL) share price rise today?

 

Domestic brokerage firm Emkay Global Research hiked the target price for SAIL to ₹200 from ₹175 per share. The current target price implies an upside potential of 20.8 per cent from the current level. Emkay Global Research has a ‘Buy’ rating on SAIL stock. 

 

The brokerage hiked the target price as they expect a sharp recovery in earnings in the short-term, supported by pricing tailwinds, inventory unwind, and improved realisations. Emkay Global Research estimated that the earnings before interest, taxes, depreciation, and amortisation (Ebitda) per ton may improve to ₹7,000–₹7,500 in the next two quarters compared to ₹4,500 in the December quarter (Q3FY26). 

 

Inventory unwinding

 

Emkay Global Research expects the inventory unwinding will continue with potential of another 1.5 million tons (MT) over the coming quarters. With this, SAIL may report a volume of 5.4 MT in the March quarter (Q4FY26). This implies a 5.5 per cent Q-o-Q increase. 

 

Rebar price recovery

 

Rebar prices have recovered along with a spike in construction and infrastructure project activity. This development happened despite a spike in coking coal costs, which should support a sequential recovery in margins, the brokerage said. 

 

Deleveraging

 

Emkay Global Research expects SAIL’s cash flow generation to improve due to higher realisations and inventory unwind. The net debt of the company may reduce by 28 per cent on year to ₹20,800 crore in the current financial year. 

 

“This should keep leverage under control, ahead of the upcoming expansion capex cycle,” the brokerage said.

 

Medium term outlook

 

In the medium term, Emkay Global Research sees a set of structural catalysts may strengthen the investment case, which should help SAIL to sustainably generate ₹7,500 and ₹8,000 Ebitda per ton.

 

The company is phasing out semis structurally over the next two years, while mills totalling 1.4 MT of new downstream capacity at Durgapur are scheduled for commissioning by the financial year 2028, the brokerage said. 

 

Cocking coal consumption of SAIL may improve to 0.9 times of crude steel by the financial year 2030, on the back of improved blending and diversified sourcing expected from the financial year 2027, according to the brokerage.

 

The company’s planned 4 MT expansion at Indian Iron and Steel Company (IISCO) is expected to take the total capacity to 25.6 MT by the financial year 2030, with ₹36,000 crore of capex. This provides visibility on volume growth, while also supporting scale benefits, Emkay Global research said.  

==============

 

Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers discretion is advised.