SAIL gets a reprieve from domestic demand in Q3 amid lower realization
Subscribe to enjoy similar stories. Steel Authority of India Ltd’s (SAIL) shares have risen 10% in the past two trading days as the December quarter (Q3FY25) results did not disappoint in an otherwise weak market for metal stocks. Metal stocks are under pressure lately as US President Donald Trump has imposed a 25% duty on all steel and aluminium imports effective 12 March.
Moreover, the SAIL stock was near lows, hitting a new 52-week low of ₹99.15 apiece on Tuesday. Its consolidated Q3 Ebitda at ₹2,030 crore, falling 5.3% year-on-year, yet better than the 40% decline in Q2. Ebitda is short for earnings before interest, depreciation, and amortization.
The company’s 10% drop in Q3 realization was largely offset by the 16% volume growth. While export volumes fell sharply by 75%, domestic volumes rose 25%, thanks to higher demand from infrastructure and consumer segments. Plus, overheads were lower.
The upshot is that Ebitda per tonne at ₹4,571, while 19% lower year-on-year, is almost 50% more than Q2. The company’s profitability is lower than that of its peers since about 14% of its products are sold as semi-finished goods, fetching lower prices. While SAIL has firmed up its plan to convert this into a final product, the commissioning of these facilities would take 3-4 years.
SAIL’s Q4 performance should be better with stepped-up government infrastructure expenditure and lower coking coal prices. The management said coking coal prices dropped to ₹19,200 per tonne in Q3 from ₹20,600 in Q2 and should fall further by about ₹1,000 during Q4. While the realization is also expected to improve in Q4, much depends on how the market pans out after the US duty imposition.
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