SAIL shares slip 2% as Q2 PAT declines 49% YoY. What brokerages say?

Synopsis

Steel Authority of India Limited shares dropped on Thursday. The company reported a significant profit decline for the July-September quarter. Total income and sales turnover saw an increase. Earnings before interest, tax, depreciation, and amortization also decreased. Morgan Stanley maintained an 'Equalweight' rating with a target price. The quarter included an exceptional loss.

Shares of Steel Authority of India Limited (SAIL) slipped over 2% to their day's low of Rs 137 on the NSE on Thursday, October 30, after the company reported a significant 49% year-on-year (YoY) decline in its consolidated profit after tax (PAT) for the July-September quarter (Q2 FY26).

The PAT stood at Rs 427 crore, down from Rs 834 crore reported in the same period last year. Sequentially, the PAT also declined 38% from Rs 685 crore in Q1 FY26.

Total income in Q2 FY26 rose 8% YoY to Rs 27,007 crore, compared to Rs 24,944 crore in Q2 FY25. On a quarter-on-quarter (QoQ) basis, the income increased from Rs 26,082 crore in Q1 FY26. Sales turnover also showed a similar trend, rising 8% YoY to Rs 26,524 crore from Rs 24,498 crore, and up from Rs 25,731 crore in the previous quarter.

Earnings before interest, tax, depreciation, and amortization (EBITDA) stood at Rs 2,829 crore in Q2 FY26, down from Rs 3,174 crore in the year-ago quarter. On a QoQ basis, the EBITDA was marginally lower than Rs 2,925 crore recorded in Q1 FY26.

Depreciation expenses rose to Rs 1,453 crore in Q2 FY26 from Rs 1,304 crore in Q2 FY25, while finance cost declined to Rs 484 crore from Rs 758 crore in the corresponding quarter last year.

After the Q2 results, global brokerage firm Morgan Stanley has maintained an "Equalweight" rating on Steel Authority of India Limited (SAIL) and assigned a target price of Rs 140. The brokerage highlighted a 20% year-on-year increase in sales volume, which reached 4.9 million tonnes. Revenue for the quarter came in 8% higher than Morgan Stanley's estimates.

EBITDA performance was notably strong, coming in 35% above the brokerage's expectations. The average realization was reported at Rs 54,400 per tonne, reflecting a 2% increase. EBITDA per tonne stood at Rs 5,100, which exceeded the estimated Rs 4,000 per tonne.

Profit after tax (PAT) was reported at Rs 430 crore, substantially higher than Morgan Stanley's forecast of Rs 120 crore. However, the quarter included an exceptional loss of Rs 340 crore related to gratuity liability.

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