SAIL shares drop 7% on 31% decline in Q2 profit

Shares of state-owned Steel Authority of India (SAIL) dropped 7% on the NSE during intraday trade on Friday, after the company reported a 31% year-over-year decline in its consolidated net profit to ₹897.2 crore for the September quarter. In the same quarter last year, SAIL had posted a profit of ₹1,305.6 crore.

Shares of SAIL opened at ₹120.50 on the NSE today, dropping to an intraday low of ₹114.88, marking a 7% decline from Thursday’s close of ₹123.36. The stock is currently trading at ₹119.25, down 3.33%.

The decline was attributed to weaker steel prices and subdued demand leading to a lower income, according to the company’s exchange filing on Thursday.

The company’s total revenue from operations in the second quarter declined 17% year-over-year to ₹24,675.2 crore from ₹29,712.1 crore, with total income also down, slipping to ₹24,842.2 crore from ₹29,858.2 crore in the same period last fiscal. Expenses for the quarter ended September 30, 2024, fell by 14.2% to ₹23,824.1 crore, compared to ₹27,768.5 crore a year ago, primarily due to reduced inventories.

Operationally, SAIL’s EBITDA dropped 24.8% to ₹2,912.8 crore in Q2 FY25 from ₹3,875.4 crore in the prior year. The EBITDA margin also narrowed by 120 basis points, landing at 11.8% versus 13% in the year-ago quarter, reflecting cost pressures amid subdued demand and declining steel prices.

In another filing, SAIL reported a slight dip in crude steel output to 4.76 million tonnes (MT) in the July-September quarter, steady from 4.76 MT in the same period last year. Sales fell to 4.10 MT from 4.77 MT year-over-year.

"Moving forward, with an expected downtrend in steel imports and projected growth in GDP and capital expenditure, H2 FY25 may yield better performance,” SAIL Chairman Amarendu Prakash said in an official statement.

Indian steelmakers, including SAIL, are grappling with rising low-cost imports from China, South Korea, and Vietnam, which pushed steel prices to a three-year low last quarter. However, a decline in iron ore and coking coal prices helped contain the impact on earnings. Rival companies like JSW Steel and Tata Steel managed to report stronger quarterly profits, buoyed by higher sales volumes and operational resilience.