SAIL - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.9
| Stock Code | SAIL | Market Cap | 64,936 Cr. | Current Price | 157 ₹ | High / Low | 160 ₹ |
| Stock P/E | 21.8 | Book Value | 136 ₹ | Dividend Yield | 1.02 % | ROCE | 6.73 % |
| ROE | 4.38 % | Face Value | 10.0 ₹ | DMA 50 | 144 ₹ | DMA 200 | 134 ₹ |
| Chg in FII Hold | 0.78 % | Chg in DII Hold | -0.26 % | PAT Qtr | 442 Cr. | PAT Prev Qtr | 645 Cr. |
| RSI | 61.9 | MACD | 3.45 | Volume | 2,21,65,573 | Avg Vol 1Wk | 3,35,51,197 |
| Low price | 99.2 ₹ | High price | 160 ₹ | PEG Ratio | -0.52 | Debt to equity | 0.60 |
| 52w Index | 95.4 % | Qtr Profit Var | 286 % | EPS | 6.61 ₹ | Industry PE | 21.6 |
📊 Analysis: SAIL shows weak long-term fundamentals with ROE at 4.38% and ROCE at 6.73%, both below compounding benchmarks. The P/E of 21.8 is aligned with the industry average of 21.6, but the negative PEG ratio (-0.52) suggests poor earnings growth prospects relative to valuation. Dividend yield of 1.02% provides limited passive income. Technical support lies around 144–134 ₹ (DMA 50 & 200). The ideal entry zone is 125–140 ₹ for margin of safety. For existing holders, consider a medium-term horizon with partial exit near 160 ₹ resistance unless profitability improves significantly.
✅ Positive
- Large market cap of 64,936 Cr. ensures stability.
- Book value of 136 ₹ provides valuation support.
- Debt-to-equity ratio of 0.60 indicates manageable leverage.
- FII holdings increased by 0.78%, showing foreign investor interest.
- Quarterly profit variation at 286% shows recent operational recovery.
⚠️ Limitation
- Low ROE (4.38%) and ROCE (6.73%) limit long-term compounding potential.
- Negative PEG ratio (-0.52) highlights weak growth prospects.
- Dividend yield of 1.02% is modest compared to peers.
- DII holdings decreased by -0.26%, showing reduced domestic confidence.
📉 Company Negative News
- Sequential decline in quarterly PAT (442 Cr. vs 645 Cr.).
- Weak profitability metrics relative to valuation.
📈 Company Positive News
- Strong rebound in quarterly profit variation (+286%).
- Improved foreign institutional participation.
- Stock trading near 52-week high (95.4% of range), reflecting investor optimism.
🏭 Industry
- Steel sector is cyclical, heavily dependent on infrastructure and global demand.
- Industry P/E at 21.6 suggests SAIL trades in line with peers.
- Structural drivers: government infrastructure push, rising domestic steel consumption.
🔎 Conclusion
SAIL earns a rating of 2.9 due to weak ROE/ROCE and negative PEG ratio, despite stable valuation and manageable debt. Long-term investors should only consider entry in the 125–140 ₹ zone for margin of safety. Current holders may adopt a medium-term horizon, with partial profit booking near 160 ₹ resistance unless return ratios improve. The stock remains a cyclical play rather than a strong long-term compounding candidate.