1.Peak debt was 52000 Cr.
2.Currently it is 36000 Cr.
3.They paid 16000 Cr of debt this year and they can pay similar amount next year.
4.Management has guided to bring it below 30000 Cr.
EV
1.Around January 20 EV was 70000 Cr(52000+18000).
2.Currently it is around 70000 Cr (36000+34000).
3.March 20 EV was approx 60000 Cr (52000+9000)
EBIDTA
1.In FY 20 it was 10000 Cr
2.TTM EBIDTA is approx 13000 Cr.
3.Next year it may cross 20000 Cr.
Positive triggers
1.Rising steel prices (From April 1st week prices are going up by 3000-8000 per tonne)
2.Ramp up in production
3.Employee cost as %of sales are coming down
4.Ebidta margin will expand
5.Huge deleveraging and operating leverage playing out.
ail has net profit of approx 4000 crore for this year in fy21. They have inventories lying of approx 4K crore of sub grade iron ore fines (Sgf) . Previous regulations prevented all captive miners from selling these Sgf in the market. But after the introduction of mmdr act they will be able to sell these at atleast 4k crore minimum. Should be around 5-6k in my opinion. It will take maybe more than 12 months to 24 months to clear this inventory. Even on conservative basis let’s assume that by this year they can sell 50% of this inventory at 4k crore valuations its still adds 2k crore profits directly to the margin without any additional costs.
Open for discussion, any thoughts on this
they are carrying 42.6mn tonnes of ore fines. they are currently selling these at 4000/tonne lets assume they can sell 75% of this at long term value of 3000/tonne its still be valued at 9000crs. but this will in the long run.
They are sold 2mn tonnes last qtr. that would mean 800crs of extra pbt every qtr. (assuming a realisation of 4000).
while valuing their inventory they have valued it around 769 per tonne approximately which seems very conservative. so even if they sell as what you are saying 2 Mt every quarter i.e 8mt anually and translates to roughly around 3200 crore. if we take it on conservative basis as 2k crore it still is 50% of current net profit of this year with no additional costs, that fits well for the company.
you are correct. but look at it this way more profit the company makes they will be able to retire debt faster which inturn will reflect in enterprise value. the share of m.cap will go up and share of debt will go down.
Steel Authority of India (SAIL) has postponed its plans to begin commercial production of head hardened (HH) rails at its Bhilai Steel Plant in Chhattisgarh, as the foreign experts involved in the trials left India in the wake of the second Covid wave.
I am trying to get last quarter sales and production quantity of Steel by Sail. I need data from April 21 to June 21 but I could not find any notification from the company.
There have been 4-5 steel supercycles in the last 100 years. Look them up. One was after the great depression deliberately designed to boost the economy.
This time - various countries have launched infra packages e.g. Federal package in US, and ECB + EIB in europe . India has also upped its road infrastructure spending significantly.
However the supercycle is expected largely due to (a) climate change related public and private capex (b) other private capex that was missing in the last 10 years . the second one is highly doubtful (in my opinion)
Doesn’t matters if steel prices go up from here, imagine if it stays here only at around 60k/t, then sail is deleveraging about 5,000crs each qtr, and it is expected to be net debt free sometime around next year. So, when a company deleverages it creates additional market cap equal to the debt repaid.
Secondly, in the near term steel prices will be hiked because of coking coal increases.
Thirdly, private capex is actually happening after almost 9-10 years, why ? See all commodity companies running at around 90% capacity, which means they have strong demand to incentivize them to expand and undertake capex.
Sail is cheap based on fundamentals. Please check out commodity and cyclical thread for this.
Thanks,
Karan
Can someone help me understand why the Debt went up in last 4 years so much, even with having enough surplus reserves? I don’t see any considerable Work in progress, was it just because credit was cheap? Just trying to understand the “Why” of it. Any help would be highly appreciated. (Source Rediff.com)
Cheap valuation among giant steel manufacturers
Benefits of increasing demand of steel and disinvestment by government
Expert opinion with short term visibility
So Tata’s acquired a 1.1 MT capacity for an EV of 12,100 cr. The enterprise value of 18k crores for 1.1 MT. SAIL 16 MT Enterprise Value at 70k crores is fair?
Hey @P2018 , can you please edit your post to reflect that 12100 includes the debt. I can delete my comment after that and we can keep the thread clean. Thank You.
