Buy SAIL, target price Rs 90: ICICI Direct

ICICI Direct has buy call on Steel Authority of India (SAIL) with a target price of Rs 90. The current market price of Steel Authority of India (SAIL) Ltd. is Rs 73.3.

Steel Authority of India (SAIL) Ltd., incorporated in the year 1973, is a Large Cap company (having a market cap of Rs 30297.40 Crore) operating in Metals - Ferrous sector.

Financials
For the quarter ended 31-12-2020, the company reported a Consolidated Total Income of Rs 19997.31 Crore, up 16.96 % from last quarter Total Income of Rs 17097.57 Crore and up 19.64 % from last year same quarter Total Income of Rs 16714.87 Crore. Company reported net profit after tax of Rs 1246.50 Crore in latest quarter.


Investment Rationale
On the back of capacity expansion, the brokerage expects SAIL to register a volume CAGR of 10% during FY20-23E. Going forward, it expects SAIL to report EBITDA/tonne of |8250/tonne in FY21E and Rs 6750/tonne in FY22E and Rs 7000/tonne in FY23E. Healthy growth in sales volume coupled with relatively firm steel prices augur well for SAIL. It values the stock at 5.5x FY23E EV/EBITDA and arrives at a target price of Rs 90, assigning BUY recommendation on the stock.

Promoter/FII Holdings
Promoters held 75 per cent stake in the company as of Dec 30, 2020, while FIIs held 4.2 per cent, DIIs 13 per cent and public and other 7.9 per cent.