Posted on May 29, 2025, by Niftynews
Shares of Steel Authority of India Limited (SAIL) rose steadily during Thursday’s trading session (May 29, 2025), reflecting investor optimism following a better-than-expected Q4FY25 earnings report. At around 12:56 pm, SAIL shares traded at ₹130.05, up 0.97% or ₹1.25 from the previous close.
In this article, we take a detailed look at SAIL’s Q4 performance, key financial highlights, analyst opinions, and whether it makes sense to buy, hold, or sell the stock for the long term.
SAIL Q4FY25 Financial Performance: A Strong Beat
SAIL delivered robust financials in the quarter ending March 2025, surpassing most analyst estimates:
- Net Profit: ₹1,178 crore, a 16% increase year-on-year (YoY) from ₹1,012 crore in Q4FY24.
- Revenue: ₹29,316 crore, slightly higher than the estimated ₹29,197 crore and up 5% from ₹27,957 crore last year.
- EBITDA: ₹3,480 crore, substantially beating estimates of ₹2,326 crore.
- EBITDA Margin: 11.9%, better than expectations but down from 12.4% in Q4FY24.
The company managed to improve profitability despite a marginal decline in EBITDA margin compared to the previous year, thanks largely to operational efficiencies and cost controls.
What Drove SAIL Q4 Performance?
Several factors contributed to the strong quarter:
- Volume Growth: SAIL’s Q4 volume hit 5.3 million tonnes (mt), a significant 17% YoY increase and more than 20% sequential growth. This was well above the broker estimate of 4.8 mt, reflecting strong demand.
- Rail Price Revisions: The company realized an additional ₹690 crore in revenue due to rail price revisions for FY24-25, helping boost the topline.
- Operational Efficiency: Operating expenses per tonne (Opex/t) were 2% lower than estimates, driven by reduced raw material costs, supporting the improved EBITDA.
- EBITDA Outperformance: The EBITDA of ₹3,480 crore was 24% ahead of analyst expectations, underscoring better-than-expected cost management and pricing power.
Analyst Opinions on SAIL Stock Post-Q4
Despite the strong earnings beat, the market response remains cautious.
Morgan Stanley has issued an underweight rating on SAIL shares, setting a price target of ₹90 — implying a potential downside of nearly 30% from recent levels.
The brokerage highlighted:
- Although volumes and EBITDA exceeded expectations, the stock’s current valuation may not justify further upside.
- They note the one-time benefit from rail price revisions and caution on the sustainability of margins amid rising input costs globally.
- The focus remains on monitoring volume growth and cost control to sustain profitability.
Other analysts are mixed, with some seeing value given India’s growing infrastructure and steel demand, while others remain wary of macroeconomic risks and commodity price volatility.
Should You Buy, Hold, or Sell SAIL Shares for the Long Term?
Reasons to Consider Buying or Holding:
- Robust Volume Growth: Sustained demand in infrastructure and construction sectors supports volume expansion.
- Operational Improvements: Better cost management could help maintain margins even with volatile raw material prices.
- Strategic Importance: As a PSU steel giant, SAIL benefits from government infrastructure push and policy support.
Reasons to Consider Selling or Avoiding:
- Valuation Concerns: The stock trades above some analyst target prices with limited upside.
- Margin Pressure: EBITDA margin has declined YoY and may face headwinds from global commodity price inflation.
- Mixed Analyst Views: With bearish calls from prominent brokers, cautious investors may prefer to wait for clearer signs.
What Investors Should Watch Next
- Q1FY26 Results: Will volume growth and margin improvements continue in the current fiscal year?
- Raw Material Prices: Steel profitability is sensitive to input costs—keep an eye on coal, iron ore, and coking coal prices.
- Government Policies: Any further infrastructure spending or steel sector reforms could impact SAIL’s future growth trajectory.
- Global Steel Market Trends: International steel prices and demand influence export opportunities and domestic pricing.
Conclusion: A Mixed Outlook for SAIL Shares Post-Q4
SAIL’s Q4FY25 results delivered a strong earnings beat, supported by higher volumes and operational efficiencies. However, the dip in EBITDA margin and cautious analyst calls suggest a mixed outlook.
Long-term investors with confidence in India’s infrastructure growth story may find value in holding or gradually accumulating SAIL shares, while risk-averse traders might prefer to wait for a better entry point given the current valuations.
Frequently Asked Questions (FAQs)
Q1. How did SAIL perform in Q4FY25?
SAIL posted a 16% YoY profit increase to ₹1,178 crore, with revenues up 5% and EBITDA beating estimates significantly.
Q2. What is the current market reaction to SAIL shares?
Shares rose nearly 1% post-results, reflecting positive investor sentiment.
Q3. What is the analyst outlook on SAIL?
Morgan Stanley rates SAIL as underweight with a target price of ₹90, suggesting downside risks.
Q4. Should I buy SAIL shares now?
Consider your risk tolerance; long-term investors may hold, but cautious traders might wait for a correction.
