SAIL - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.6
| Stock Code | SAIL | Market Cap | 61,425 Cr. | Current Price | 149 ₹ | High / Low | 160 ₹ |
| Stock P/E | 20.7 | Book Value | 136 ₹ | Dividend Yield | 1.08 % | ROCE | 6.73 % |
| ROE | 4.38 % | Face Value | 10.0 ₹ | DMA 50 | 143 ₹ | DMA 200 | 133 ₹ |
| Chg in FII Hold | 0.78 % | Chg in DII Hold | -0.26 % | PAT Qtr | 442 Cr. | PAT Prev Qtr | 645 Cr. |
| RSI | 52.2 | MACD | 3.53 | Volume | 3,31,11,369 | Avg Vol 1Wk | 3,58,33,330 |
| Low price | 99.2 ₹ | High price | 160 ₹ | PEG Ratio | -0.49 | Debt to equity | 0.60 |
| 52w Index | 81.3 % | Qtr Profit Var | 286 % | EPS | 6.61 ₹ | Industry PE | 20.7 |
💰 Financials: SAIL shows moderate financial strength with ROE at 4.38% and ROCE at 6.73%, reflecting limited efficiency in generating returns. Quarterly PAT has dropped from ₹645 Cr. to ₹442 Cr., though year-on-year profit variation shows improvement (286%). Debt-to-equity ratio of 0.60 is healthy for a capital-intensive steel sector, indicating manageable leverage. Cash flows remain cyclical, tied to steel demand and commodity prices.
📊 Valuation: Current P/E of 20.7 is aligned with industry average, suggesting fair valuation. P/B ratio (~1.1) is reasonable given the book value of ₹136. PEG ratio of -0.49 highlights concerns about earnings growth sustainability. Intrinsic value suggests the stock is not deeply undervalued, but offers potential upside if steel demand strengthens.
🏭 Business Model & Competitive Advantage: SAIL is India’s largest state-owned steel producer with integrated operations from mining to finished steel. Its competitive advantage lies in scale, government support, and captive raw material sources. However, global steel price volatility and high operating costs limit margin expansion.
📈 Entry Zone: Considering DMA 50 (₹143) and DMA 200 (₹133), accumulation is attractive in the ₹135–₹145 range. Long-term investors should hold cautiously, as returns depend heavily on commodity cycles and infrastructure demand.
Positive
- Healthy debt-to-equity ratio at 0.60 for a capital-intensive industry.
- Year-on-year profit variation shows strong rebound (286%).
- Government backing ensures stability and long-term viability.
- Captive raw material sources reduce supply chain risks.
Limitation
- Low ROE (4.38%) and ROCE (6.73%) reflect weak efficiency.
- PEG ratio of -0.49 signals poor earnings growth outlook.
- Quarterly PAT decline from ₹645 Cr. to ₹442 Cr.
- High dependence on global steel price cycles.
Company Negative News
- Recent quarterly profit decline raises short-term concerns.
- Marginal reduction in DII holdings (-0.26%).
Company Positive News
- Increase in FII holdings (+0.78%), showing foreign investor confidence.
- Stock trading near 52-week high, reflecting strong market sentiment.
Industry
- Steel industry P/E at 20.7 indicates SAIL trades in line with peers.
- Sector growth driven by infrastructure, construction, and manufacturing demand.
- Global price volatility remains a key risk factor for margins.
Conclusion
🔑 SAIL offers stability as a government-backed steel producer with manageable debt and strong scale advantages. However, weak return ratios and earnings volatility limit its attractiveness. Entry around ₹135–₹145 is reasonable for investors seeking cyclical exposure, but long-term holding should be cautious, aligned with infrastructure growth and commodity cycles.
Would you like me to also prepare a peer comparison with Tata Steel and JSW Steel to highlight how SAIL stacks up against private sector competitors?