SAIL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.4

📊 Core Financials Overview

Profitability

ROE: 4.38% and ROCE: 6.73% are relatively weak, reflecting modest capital efficiency.

EPS of ₹6.83 and a P/E of 19.4 suggest the stock is fairly priced, though slightly below the industry average of 23.1.

PAT dropped from ₹1,200 Cr to ₹685 Cr QoQ, indicating earnings volatility despite a 115% YoY profit surge.

Balance Sheet Strength

Debt-to-equity ratio: 0.66 — moderate leverage, manageable for a capital-intensive business.

Book Value: ₹135 vs Current Price: ₹133 → P/B ratio ~0.98, indicating the stock is trading near its book value.

Dividend Yield: 1.20% — modest, but adds income appeal.

Cash Flow & Stability

PEG ratio of −0.46 is distorted due to inconsistent earnings growth.

RSI at 63.4 and MACD positive suggest bullish momentum, though nearing overbought territory.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 19.4 Slightly undervalued vs industry PE

P/B Ratio ~0.98 Fairly priced

PEG Ratio −0.46 Not meaningful due to erratic growth

Intrinsic Value ~₹120–₹125 Slightly below current price

SAIL appears fairly valued, with limited upside unless earnings stabilize.

🏭 Business Model & Competitive Edge

Sector: Steel Authority of India Ltd is one of India’s largest integrated steel producers and a Maharatna PSU.

Strengths

Strategic government backing and access to domestic raw materials

Broad product portfolio across flat and long steel categories

Institutional interest rising (DII +1.55%)

Challenges

Low return ratios and earnings volatility

High contingent liabilities and cyclical exposure to global steel prices

According to Screener, SAIL has delivered poor sales growth (10.7% over 5 years) and a low 3-year ROE of 4.86%, though recent profit recovery is encouraging

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📌 Entry Zone Recommendation

Suggested Entry Range: ₹120–₹125

Near intrinsic value and 200 DMA (₹124)

RSI nearing overbought zone; wait for pullback before entry

🧭 Long-Term Holding Guidance

Hold if Already Invested: Government backing and sector recovery support long-term stability.

Accumulate on Dips: Especially near ₹120 for better margin of safety.

Watchlist Triggers

EPS consistency and margin expansion

Steel price trends and infrastructure demand

Institutional accumulation

SAIL is a cyclical value play with strategic relevance, but its fundamentals call for a cautious, price-sensitive approach. You can explore deeper insights on TopStockResearch’s fundamental dashboard

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