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Informist, Friday, Nov. 8, 2024

By Rajesh Gajra

MUMBAI – Steel Authority of India Ltd. continues to face the challenge of low domestic flat steel product prices in the current Oct-Dec quarter, but has seen long steel product prices bottoming out post-monsoon season, the company's management said in a post-earnings analyst conference call Friday. Its sales realisation in October was lower than the average in the September quarter, the management said while responding to an analyst's question.

The steel major reported its September quarter earnings on Thursday. SAIL's revenue from operations fell 17% on year to INR 246.75 billion, which was slightly above the Street's estimate of INR 246.31 billion. The hit on SAIL's revenue in Jul-Sept was on account of a 14% on-year fall in sales volume to 4.10 million tonnes and lower sales realisation due to fall in steel prices. Sequentially, however, SAIL's revenue was up 2.8% on the back of a 2.2% increase in sales volume.

The average net blended realisation in the September quarter was INR 50,500 per tonne, and in October the net blended realisation was lower at around INR 48,000 per tonne, according to the management. So far this month, the net blended realisation is around INR 49,500 per tonne, up from the previous month, the management said.

The company has set a sales volume target of around 18 million tonnes for 2024-25 (Apr-Mar), the management said. In Apr-Sept, the company sold 8.11 million tonnes of steel, as per its press release Thursday. According to the management, while the domestic demand prospects for steel are okay going forward, the demand from China continues to be very low due to sustained weakening in the country's real estate sector.

The finished steel inventory of the company at the end of September was 1.93 million tonnes, according to the management. At the end of June, it was 1.84 million tonnes.

The management said in the ongoing quarter, the company is getting the benefit of lower coal prices in October and expects a similar situation in November. SAIL's coal cost, which forms a chunk of input costs for the company, has been trending downwards so far in the December quarter, it added. Imported coal prices on an average are at around INR 20,000 per tonne in October and November so far, down from an average price of INR 22,000 per tonne in Jul-Sept. In the current mix, SAIL's use of imported coal is 85% and the balance is from domestic coal.

SAIL's net debt was INR 355.96 billion as of Sept. 30, according to the management, almost the same as INR 356.59 billion at the end of June. The management said the company's capital expenditure target for FY25 was INR 60 billion, of which INR 22.50 billion was already incurred in the first half ended September. The management said "major capital expenditures will start coming in from 2026-27 (FY27)."

On Thursday, shares of SAIL closed 4.2% lower at INR 118.21 on the National Stock Exchange.  End

Edited by Tanima Banerjee

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