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Revenue in line; marginal miss on EBITDA

Domestic demand continues to remain robust

* Revenue was down 5% YoY at INR291b in 4QFY23, and was in line with our estimate of INR292b.

* ASP for the quarter stood at INR62,245/t (down 5% YoY) against our estimate of INR 64,908/t.

* EBITDA was down 33% YoY at INR29b (11% miss), driven by higher coal prices, volatility in steel prices, higher royalty payment, volatility in forex, and higher employee cost, which adversely impacted the margins. EBITDA/t stood at INR6,226/t.

* APAT for the quarter was down 52% at INR10.7b and was 19% below our estimate of INR13b, primarily due to lower realizations, higher input cost, and higher depreciation, partially offset by lower interest expense and higher ‘other income’.

* SAIL continued its volume momentum and crude steel production was up 8% YoY at 4.95mt. Sales volume was marginally flat YoY at 4.7mt (in line).

* All the plants continue to perform well and all the integrated plants were EBIT positive.

* The Bhilai plant posted a strong revenue at INR91b (up 7% YoY), whereas Rourkela and Bokaro performed better on a QoQ basis and posted a revenue of INR68b and INR69b.

* For FY23, SAIL posted the highest ever revenue, crossing the INR1tr. mark at INR1,044b (up 1% YoY). EBITDA stood INR80b (down 62% YoY) and APAT stood at INR17b.

* SAIL posted the best ever crude steel production (up 2%) and sales at 18.3mt and 16.2mt

Highlights from the management commentary

* Management expects to clock sales of 18.7mt (15% increase) in FY24, driven by high demand from the infrastructure sector.

* Coal cost, which was around INR25,500/t in 4QFY23, is expected to increase to INR28,000/t in 1QFY24.

* Benefits from reduction in coking coal cost is expected to accrue from Jun’23 onwards.

* NSR in 1QFY24 has declined INR2,000/t for flats as well as longs and is near 3QFY23 levels.

* Share of VAP stands at 52.7%, and is expected to increase as the contribution from semis reduce going forward.

* Capex of INR65b is earmarked for FY24 and INR50-55b for FY25

* SAIL has set a target to achieve 35mt of crude steel production by FY31-32. To support this growth ambition, the company has allocated a capex of INR1tr. This investment will be utilized for both debottlenecking and growth capex over the next seven to eight years.

* The management expects robust demand in India with no off-take issues

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