SAIL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.4

🏗️ Steel Authority of India Ltd (SAIL) offers fair valuation and sector strength, but weak return metrics and earnings volatility limit its long-term appeal.

📈 Positive

• 📉 Fair Valuation: P/E of 21.4 is slightly below the industry average of 22.4.
• 💸 Dividend Yield: 1.17% provides modest income for shareholders.
• 📊 Book Value Alignment: Current price of ₹137 is close to book value of ₹136, suggesting intrinsic value support.
• 📈 Institutional Interest: DII holdings increased by 0.80%, and FII holdings rose by 0.11%.
• 📉 Moderate Leverage: Debt-to-equity ratio of 0.60 is manageable for a capital-intensive business.

⚠️ Limitation

• 📉 Weak Return Metrics: ROCE at 6.73% and ROE at 4.38% indicate suboptimal capital efficiency.
• 📉 Negative PEG Ratio: -0.51 suggests valuation may not be supported by growth.
• 📉 Earnings Decline: PAT fell from ₹685 Cr. to ₹645 Cr., a 22.6% drop.
• 📉 Volume Drop: Current volume is significantly below weekly average, indicating reduced momentum.

📉 Company Negative News

• Quarterly profit decline raises concerns over margin pressure and input cost volatility.
• Trading near 52-week high with limited upside unless earnings improve.

📈 Company Positive News

• Government infrastructure push and steel demand recovery support long-term growth.
• Operational efficiency and modernization initiatives underway across plants.
• Positive MACD and RSI suggest stable technical momentum.

🏭 Industry

• Steel sector benefits from infrastructure, construction, and manufacturing growth.
• Industry P/E of 22.4 reflects moderate valuation norms.
• Peers include Tata Steel, JSW Steel, and Jindal Steel & Power.

🧾 Conclusion

• 📉 Entry Zone: ₹125–₹132 could be a favorable accumulation range based on DMA and RSI levels.
• 📈 Long-Term View: Hold with caution; monitor margin trends and global steel pricing.
• 🔍 Valuation Watch: Consider phased entry or wait for earnings rebound to justify current price.