SAIL Q1 Review - Higher Costs Led The Miss In Earnings: Prabhudas Lilladher
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Prabhudas Lilladher Report
Steel Authority of India Ltd. reported Q1 FY22 Ebitda below our estimates by 7% while above consensus estimates by 6%.
Miss on our estimates was largely due to higher than expected cost.
We downgrade our Ebitda estimates for FY22E by 4.8% to factor higher coking coal cost and royalty on iron ore. While, we increase our estimates for FY23E by 8.6% to factor in higher realisations.
We maintain our positive outlook on sector as China’s efforts to maintain balance between reducing pollution (control on production, higher imports and reduced exports) and expansion in economic activity would keep steel prices firm.
In wake of higher steel prices, we factor in strong margins at ~Rs 17,600/tonne for SAIL in FY22E.
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