Steel Authority of India Ltd (SAIL) shares, in contrast to Tata Steel and Jindal Steel & Power, which recorded returns of 4.8% and 8.84% respectively, have shown a weak performance with a flat return of 0.4% since the beginning of the year. Despite a 1.4% increase in stock value, closing at ₹89.27 on Friday, analysts remain cautious due to expected cost pressures following the company's performance in the fourth quarter.
SAIL reported a standalone profit of ₹1,241 crore in the second quarter, a significant improvement from the ₹386 crore loss a year ago. Operating income increased by 13% annually, reaching ₹29,714 crore.
The company's coking coal supply structure is seen as a buffer against adverse effects arising from the increase in international coking coal prices in the third quarter. Despite a positive second-quarter performance, analysts express caution by maintaining a neutral stance with an ₹85 target price.
The company's planned expansion of ₹1 lakh crore over the next decade raises concerns about future debt reduction, putting pressure on the balance sheet and cash flow. In response to increased coal costs and capital expenditure guidance, EBITDA forecasts for the Fiscal Year 24-25 were reduced by 10/1%.
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