Earnings call transcript: SAIL sees strong Q1 2025 growth, stock dips

Steel Authority of India Limited (SAIL), with a substantial market capitalization of $12.2 billion, reported robust growth in Q1 2025, with notable increases in production and sales volumes. Despite these gains, the company’s stock experienced a decline of 2.82% following the earnings announcement. According to InvestingPro analysis, SAIL is currently trading above its Fair Value, suggesting careful consideration for new positions. The firm is optimistic about future performance, driven by operational efficiencies and a positive outlook for the steel market.

Key Takeaways

• Saleable steel production rose by 12% year-over-year.
• Sales volume increased by 15% compared to the previous year.
• Profit before tax surged to INR 890 crores, marking a 2.7x growth from last year.
• Stock price fell by 2.82% post-earnings announcement.
• SAIL reduced borrowings by INR 1,100 crores in Q1.

Company Performance

SAIL’s performance in Q1 2025 demonstrated significant growth across key metrics. The company produced 4.7 million tonnes of saleable steel, representing a 12% increase from the same period last year. Sales volume also saw a substantial rise, reaching 4.55 million tonnes, which is a 15% year-over-year growth. With an impressive gross profit margin of 64.2% and a healthy current ratio of 1.24, the company’s profit before tax was INR 890 crores, showing a significant increase from the previous year, highlighting the company’s effective cost management and operational improvements. For deeper insights into SAIL’s financial health and detailed metrics, consider exploring InvestingPro, which offers comprehensive analysis and additional ProTips about the company’s performance.

Financial Highlights

• Revenue: Not specified in the earnings call summary.
• Profit Before Tax: INR 890 crores, 2.7x growth year-over-year.
• Borrowings: Reduced by INR 1,100 crores in Q1.
• Blended NSR: INR 51,700 per tonne.
• Coking coal blended cost: INR 16,900 per tonne.

Outlook & Guidance

SAIL has set an ambitious sales volume target of 18.5 million tonnes for the full year. The company expects the net sales realization (NSR) in July to be around INR 50,000 per tonne, with positive expectations for steel prices in the coming months. InvestingPro data reveals that SAIL has maintained dividend payments for five consecutive years, demonstrating consistent shareholder returns. The company’s strong financial position is further supported by an Altman Z-Score of 11.56, indicating robust financial health. The capital expenditure (CapEx) target for FY 2026 is INR 7,500 crores, with Q1 CapEx already exceeding the target at INR 1,642 crores. The company anticipates a potential increase in CapEx for FY 2027, driven by the expansion of the ISCO Steel Plant.

Executive Commentary

Ashok Panda, Director of Finance, highlighted the robust fundamentals of the Indian economy, stating, "India’s fundamentals remain stronger. Over 80% of Indian CEOs are optimistic about growth prospects." He also emphasized the importance of capital expenditure for growth, saying, "CapEx is the growth engine for our country, and we’re expecting CapEx to increase further." Panda expressed optimism about future prospects, noting, "We are hopeful that good times await us and our investors going forward."

Risks and Challenges

• Rising imports and global oversupply could pressure domestic steel prices.
• Stagnant demand in advanced economies may affect global steel market dynamics.
• Potential increases in raw material costs, such as coking coal, could impact profitability.
• Regulatory changes and environmental policies could pose operational challenges.
• Fluctuations in currency exchange rates might affect financial performance.

Q&A

During the earnings call, analysts inquired about SAIL’s marketing arrangement with NMDC, the impact of stock valuation on financials, and pricing mechanisms in the railway sector. The company also addressed concerns about its coking coal inventory and pricing strategies, providing clarity on how these factors influence its operations and financial outcomes.

Full transcript - Steel Authority of India Ltd. (SAIL) Q1 2026:

Conference Moderator: Ladies and gentlemen, good day, and welcome to Steel Authority of India Limited Q1 FY ’twenty six Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Kejriwal from Noama Wealth.

Thank you, and over to you, sir.

Ashish Kejriwal, Analyst, Nuvama Wealth Management: Thank you, Amshad. Good afternoon, everyone. On behalf of Nuvama Wealth Management, we welcome you all for Team Doctor of India’s first quarter call. We are pleased to host, doctor Ashok Panda, director of finance, along with his team. Now I would request the management for his opening remarks.

And thereafter, we can open the call for VENKATAKRISHNAN:] Q and A. Thank you. And over to you, sir.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes. Thank you very much, Mr. Ashish. Very good afternoon, everyone present through this call. Let me welcome all our investors and analysts who are joining this regional call for the financial results of sales for the full year quarter ’1 FY twenty twenty fivetwenty twenty six.

I’m sure most all of you would have gone through the financial results available on the website of the company and stock exchange. Results were out on twenty fifth. However, I would briefly advise you on the same before we move to the question and answer section, where we would be happy to receive questions from your side and

: try to answer those questions.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Let us look at the economic scenario. Let me first apprise you on the economic scenario in which we’ve been operating. The global economy has been battling the inflationary forces for quite some time now. The countermeasures by the economies across the globe led to the decline in GDP growth rates in the countries. Global GDP growth rate is projected at around 2.4% in 2025, down from nearly 2.9% in 2024, driven lower by escalating trade tensions, rising protectionism and policy uncertainty.

IMF focus is at approximately 3.3% and OECD advanced economies like U. S. And erosion to grow just at 1.3% to 1.5%. This slower pace is fueled by tariff, particularly sweeping U. S.

Trade measures and fragmented supply chains. Global inflation is cooling right now. Headline inflation is expected to fall to around 4.1% to 4.2% in 2025, down from pandemic era peaks. Nonetheless, Central Banks remain cautious about it. The ECB recently held its benchmark rate at 2%, giving lingering trade war risk, while U.

S. Federal Reserve despite maintaining a high interest rate hints at rate cuts later in the year if inflation continues to abate. Amid global headwinds, India continues to outperform. India’s fundamentals remain stronger. Over 80% of Indian CEOs are optimistic about the growth prospects, buoyed by demographic advantages, expanding middle class and a shift towards service led development.

In fiscal year twenty twenty four-twenty twenty five, GDP growth reached around 6.4%, driven by robust private consumption of growth at 7.3% and healthy activity across agriculture industry and services. Central agencies like OECD and even project India’s economy will expand by roughly 6.3% to 6.7% through 2026. Inflation levels are remarkably low. Retail inflation in June stood at just 2.1%, well below the RBI’s full year target of 3.7. With easing price pressures, the RBI is signaling room for interest rate cuts to boost liquidity and investment in the country.

The Indian government’s multi pronged strategy aims to counter global disruptions with domestic strength. CapEx is the growth engine for our country, and we’re expecting CapEx to increase further. It will result in sustaining long term growth, promoting infrastructure investment and job creation in the country. Foreign trade push, they recently signaled India UK FDA in 2424 July 2025 is expected to unlock opportunities for startup companies, manufacturing and services exports without compromising India’s strategic interest. On the front of global and domestic vulnerabilities, we still remain.

With respect to rising protectionism and volatile capital flows due to trade disputes, particularly U. S. Tariffs on China and Europe. Agricultural and rural inflation spikes post monsoon. Climate shocks impacting global food supplies and commodity prices.

India should build the capabilities in services and high value sectors going forward. When we talk about the world steel scenario, coming to the steel scenario, the stem has been much in line with the economic situation. As of mid-twenty twenty five, the global steel market is growing slowly with total demand expected to rise by just 1.7% globally according to WSA. Advanced economies, particularly Europe, Japan and U. S.

Are experiencing stagnant or declining demand, mainly due to slower construction activity and higher interest rates. On the contrary, developing economies led by India, Southeast Asia and parts of Africa are driving demand through infrastructure, organization and industrialization. China, which accounts for more than 50% of the global steel production is facing a historic slowdown in domestic demand, largely due to prolonged real estate prices, tight credit conditions and weak exports. In response, silage producers are uploading excess steel in international markets at lower prices, leading to global oversupply and price separation. This has triggered trade tensions and protective measures across several countries including India, UAE countries and U.

S. Now let us look at the Indian steel industry. Coming to this industry, domestic steel demand is growing at a rapid pace, over 8% annually. This demand is driven by infrastructure projects, affordable housing, railways, ports, highways, growth in automotive, defense and renewable energy sectors. India’s per capita steel consumption has doubled in the last decade, which is more than 120 kilograms right now.

Dow still below the global average, but it is indicating immense headroom for growth in the future years. However, challenges remain in the form of rising imports, global oversupply and input dependence. Input dependence means it is basically coking coal, its variability in the price is determining the cost of production out here. Rising imports means steel imports surged over 24% in 2025, especially from China, Vietnam and Japan, creating price pressure in domestic producers. However, imports in this quarter one of this year is under control.

The prices of steel have also been operating in a narrow band, but with the prices stabilizing in the past one or two weeks right now. There are hopes for improvement in next quarters, which has traditionally remained the strongest for steel producers. Now let us discuss about the company performance for the quarter Q1. Coming to the performance of sales during quarter one FY twenty twenty five, twenty six, the same has been as follows. Saleable steel production during the quarter stood at 4,700,000 tonnes as against 4,200,000 tonnes last year quarter one with a growth of 12%.

Sales volume stood at 4,550,000 tonnes as against 4,000,000 tonnes in last year quarter one with a growth of 15%. In fact, this is the best ever first quarter performance in sales in any financial year for sale. On the financial front, due to impact of lower prices, turnover could register a lower growth of 8%. Added by improvement in efficiency parameters, the profit before tax registered a growth of more than 2.7 times to standard INR890 crores this quarter vis a vis crores last year quarter one before exceptional items and after exceptional item it was I think only INR14 crores last year quarter one. The company continues its drive towards reduction in borrowings as on thirtieth June twenty twenty five, which stood at INR28741 crores as against INR298811 crores as in thirty first March twenty twenty five.

So we have reduced our borrowings by around INR1100 crores in quarter one this year. So on the front of sustenance and operational efficiencies, we have improved the fuel rate, coal to ore metal ratio, increased CDI and reduced coke rate, reduced specific energy consumption this quarter as compared to the previous quarter, which has given us advantage in the cost front as well as drilling the steel. Our CO2 emission levels have also improved in this quarter as compared to the previous quarter as compared to quarter one of last year. However, we are still having more targets to improve it further. We are focusing on zero liquid discharges, eco restoration of areas and regions and we are focusing also on CSL activities for giving benefit to the stakeholders in the society.

So this is not about the overall scenario. With this, I hand it back to Mr. Kajarwal for opening the Q and A session. Thank you. Mr.

Ashish?

Conference Moderator: Thank you very much. We will now begin the question and answer session. Session. The first question from the line of Amit Lahoti from MK Global. Please go ahead.

Amit Lahoti, Analyst, MK Global: Thanks for the opportunity. My question is on cost. So how much was our blended cost of coking coal in Q1?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes, that is the question. It is INR169818 per tonne.

Amit Lahoti, Analyst, MK Global: Okay. So it is flat versus the previous quarter?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Previous quarter was INR17653 crores on average. So there’s a bit of improvement, yes, around crores, INR700 crores per ton.

Amit Lahoti, Analyst, MK Global: Okay. So we are seeing better coking coal prices as well as the coke rate. So one thing which I wasn’t able to reconcile was the delta in EBITDA per ton and that is due to partially due to higher cost. So if you can help reconcile that, which cost items have actually moved up?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Regarding your talking about EBITDA per TSS, which is INR6400 crores now as compared to INR6000 crores in quarter one last year. So when we look at the imported coal price, average coal Brent cost 16,918, for term given that. So quarter one previous year was,

: just one sec.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): So it is a little less than that. There is an improvement in the production volumes in this quarter one as compared to previous quarter one. So in the EBITDA numbers, when we talk about EBITDA numbers actually, we’ve got advantage in the imported coal and because the royalty is more in the iron ore, so there is a disadvantage. In the NSR front, there is a disadvantage. But EBITDA is also down, EBITDA per ton of syllabus is down primarily because of the stock utilization rates.

Because as you understand, because of the reduction in the imported coal rates, the cost of production has come down. And as a result of that, the stock utilization rate of the items, steel items and iron items, they have come down drastically. So it has impacted the P and L account in terms of accounting. That’s the reason why the EBITDA per tonne of sellable steel appears to be little less as compared to last year quarter one.

Amit Lahoti, Analyst, MK Global: Okay. And where do we see the guidance for Q2 on coking coal?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Because so far as Q2 guidance is concerned, coking coal prices are almost flat as it was in quarter one. We are hoping that it will remain at the same level, a little bit of variation here and there. Won’t be on the downside, could be little up or maybe at the same level. That’s about the coking coal. Now talking about the stock relation impact, it is a onetime impact which has come in quarter one because of the reduction in the cost of production and then transition from last year to this year.

So that impact is unlikely in quarter two. It will not be there in the quarter two. So quarter two will have advantage with respect to the stock position rates. And the coal prices will remain flat, that will ease out our cost of production.

Amit Lahoti, Analyst, MK Global: Okay. Thank you and all the best.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Thank you.

Conference Moderator: Thank you. The next question is from the line of Amit Dixit from Goldman Sachs. Please go ahead.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes.

Amit Dixit, Analyst, Goldman Sachs: Hi. Good afternoon, everyone. Thanks for the opportunity. A couple of questions from my side. The first one is on the CapEx.

So what was the CapEx in this quarter? How much CapEx do we expect this year? And if you can also highlight the status of the CapEx project that we have planned plant wise?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes. CapEx, first of all, let me tell you CapEx last year was close to INR 6,000 crores. And this year, we have kept a target of INR7500 crores for the year. This is a higher target and we are confident that we’ll be able to achieve that. And in quarter one, we have already crossed the target, which we have given.

I’ll just give you the number a bit later. The number is quarter one target was how much? Quarter one, we have achieved INR1642 crores, which is more than the target we had set for the quarter one. And then for the entire year, the target is as I have told INR7500 crores and we have got the plans to achieve it. So far as the facilities are concerned, as you said actually, we’ve got the facilities which are in the pipeline, the facilities which are under execution from there we are getting the CapEx and sale is doing expansion and to start with in Isco steel plant.

So the majority of the lot of expenditure of CapEx in Isco will come from next year. So that means from next year onwards the CapEx figures is still higher than INR7500 crores which is there this year. A bit of that Isco CapEx on account of expansion may surface this year, but most of the CapEx will be from the ongoing projects which are happening in the various plants.

Amit Dixit, Analyst, Goldman Sachs: Okay, The second question is on the real price revision. So, saw some advantage that we had to the tune of INR173 odd crores. Now this pertains to FY ’twenty four as highlighted in notes to account. So just wanted to understand the current rail price and what was the rail price booked in FY ’twenty four? And how much of this advantage can we get further down the

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes. Let me tell you the figure. The figure which was finalized by joint pricing committee was for 2324. And on that basis, because we had taken the income at 78,000, so it was little more than that INR 79,000 something. So it got around INR 173 crores in the accounts.

That is for INR 23,024. Now twenty twenty four-twenty twenty five incomes were at INR17000, which was continuing. Now from twenty twenty five-twenty twenty onwards, the provisional price has been at INR74000 per tonne because of the softening of imported coal prices, so the provisional prices has been kept less. So that’s the reason why accounting is already done in this manner and going forward we’ll have no issues on this.

Amit Dixit, Analyst, Goldman Sachs: So can we expect some more benefit from this or everything for FY24 has already been taken into account?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): More benefit in the sense this already

Ashish Kejriwal, Analyst, Nuvama Wealth Management: Due to

Amit Dixit, Analyst, Goldman Sachs: rail price revision.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes, rail price revision benefit will not come in this year further because this is already actualized. It’s already actualized and that is why no more areas are expected in this year.

Amit Dixit, Analyst, Goldman Sachs: Got it, sir. Thank you so much

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): and all the best.

Conference Moderator: Thank you. The next question is from the line of Ashish from MLP. Please go ahead.

Amit Lahoti, Analyst, MK Global: Hi, am I audible?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes, yes.

Amit Lahoti, Analyst, MK Global: Hi, sir. Sir, how much is the stock valuation impact this quarter?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes, stock valuation impact this quarter is around $10.50 crores.

Amit Lahoti, Analyst, MK Global: So this is so INR $10.50 crores is a one off which will not repeat next quarter onwards. Is that correct to say?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): It will not repeat next quarter. This is quarter one versus quarter one.

Amit Lahoti, Analyst, MK Global: Okay, okay. And this was not there in Q4?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): This was not during last Q4. Last Q4, some amount of population impact due to the hydrolysis plus or minus something like that. But medallion was not there in Q4. So when we compare this Q1 versus Q4, impact is around INR950 crores.

Amit Lahoti, Analyst, MK Global: Okay. And also what will be the impact because of higher royalty on INR this quarter?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): This quarter is basically because of the IBM price.

Amit Lahoti, Analyst, MK Global: This is a Q4.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): It could be somewhere around, we had say around INR250 crores or INR260 crores, just 103 crores to be specific.

Amit Lahoti, Analyst, MK Global: And did we any revenue for sale of NMDC steel, I mean, for marketing NMDC steel? Last quarter, we highlighted we got some revenue.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): 373,000.000 tonnes

Amit Lahoti, Analyst, MK Global: we have sold actually. INR 1,800 crore revenue. So

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): we have got a revenue of around in this quarter around INR 1,800 crores odd that revenue.

Amit Lahoti, Analyst, MK Global: So just to fund it, what would be the realization increase this quarter versus Q4?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): In terms of what, rupees per tonne?

Amit Lahoti, Analyst, MK Global: Rupees per tonne, yes, yes, NFR increased rupees per tonne for Q1 versus Q4. Just one sec.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): So Q1 versus Q4, Q1 is around, you can say INR1600 per ton. INR1600. Okay.

Amit Lahoti, Analyst, MK Global: And how should we look at the NSRs for average of Q2 versus Q1?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): See, everybody knows about it actually because in the rainy season, which is there in Q2, the prices have been little compressed. So steel prices are down in July. But as I have already given in my opening remarks that in last one or two weeks, it has started improving. There are signs of improvement in the prices in the flat as well as in the long products. So hopefully, next month and the next to next month, August and September, this slide which has taken place in July would be offset.

But Q2 price will be down as compared to Q1, that is what it looks like at this moment.

Conference Moderator: Thank you. The next question is from the line of Prateek Singh from DAM Capital Advisors. Please go ahead.

Amit Lahoti, Analyst, MK Global: Thanks, sir. Thanks for taking the opportunity. Just following on Ashish’s question earlier, if you can give us actual numbers for NSR, both flat and long for Q1 as well as Q4 in rupees per tonne?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Q1 and Q4. So Q1 long is 54,500 and Q4 long is 53,300. In case of flat, Q1 is 50,400 and Q4 is 47,300.

Amit Lahoti, Analyst, MK Global: So sir, if you saw a decent increase in MSRs, I was a bit confused when I look at the slides. So you know the slide where you show an EBITDA bridge from Q4 to Q1, two things caught my eye. One was that the sale priceNSR, we are putting a negative number in the sense of that it’s impacting the EBITDA negatively even moving from Q4 to Q1. That is one. And second is the raw material usage is also hitting us negatively.

What is the raw material usage? I mean, I would assume that given that we produce less, usage also would be lower?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes. No, it is not like that actually. I can explain you. When we compare you were asking a question about Q1 versus Q4. So when we compare Q1 versus last year Q1, everything appears to be very positive.

But when we compare Q1 versus Q4, then even raw material issues front, there is a negative because the technical parameters in quarter one are adverse as compared to quarter four because quarter four happens to be the best producing month and that is why best technology parameters as well as production volume. In quarter one, what happens in all the organizations, they go for capital repairs, shutdowns and all that. So productions are not that consistent as compared to quarter four. And that is the reason why when we regulate and throttle the production, then the technology parameters also get impacted. So that is why the raw material usage is adverse in this quarter one compared to quarter four.

However, these are better than quarter one of last year. And source of production volume in this quarter one is less than that of quarter four of last year. But quarter one as compared to quarter one, is an improvement even in the production volumes. So that is why

Amit Lahoti, Analyst, MK Global: On the MSR, sir, why are we showing an adverse impact of MSR despite an improvement?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): No. If you look at that actually, that can be split into two categories, which we’ll do from the next time. One is NSR impact and the other one is the stock relation impact. So when we look at the total net impact is INR258 minuteus, out of that around INR950 crores minus is because of the stock relation and you can say around INR600 crores to INR700 crores plus is because of the sales price increase. So on the sales NSR front, there is a positive around of around INR650 crores to INR700 crores.

However, there is negative on account of stock relation rate impact of around INR $9.50 crores. So on the whole, it is minus INR $2.58 crores.

Amit Lahoti, Analyst, MK Global: Understood, sir. And sir, can you just tell us what are the spot NSRs right now in Downs And Flat?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): What are the, pardon?

Amit Lahoti, Analyst, MK Global: What are the current NSR that we are seeing right now maybe as of

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): the Okay. Year date, start means July expected NSR is somewhere around, long is around INR 51,500 and flat is around INR 48,600.

Amit Lahoti, Analyst, MK Global: Understood sir. And sir, any guidance as to what kind of full year volumes in terms of sales you would be doing?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Where in quarter two?

Amit Lahoti, Analyst, MK Global: Not the full year, for ’twenty 06/21 to this quarter.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): For the full year, we are expecting somewhere around 18,500,000 tonnes.

Amit Lahoti, Analyst, MK Global: Okay. And just a last just a suggestion, this is something which I’ve seen over the past few quarters. In the production performance slide, sir, it would be best that we mention whether it’s for the quarter or for the cumulative till that quarter because this time, it’s saying f 105. So I assume it’s one q because it’s easy. But usually in 2Q, 3Q also, it says FY ’ninety five, then we get confused whether it is for the first three quarters or only for that quarter.

Just a suggestion to make it more clearer in the production performance line, sir. Yes.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): We have noted your suggestion. We’ll do the needful.

Amit Lahoti, Analyst, MK Global: Yes. Thanks a lot.

Conference Moderator: Thank you. The next question is from the line of Kamlesh Bhagmar from Lotus Asset Managers. Please go ahead.

Ashish Kejriwal, Analyst, Nuvama Wealth Management: Yes. Thanks for the opportunity, sir. Sir, I just wanted to understand more about this stock valuation. I think it is more of a finished goods we have. So is it more better we have valued the inventory at the current prices or what we have done with the stock valuation?

Because for the first time, we are getting the adjustment from your side that

: in sales, we

Ashish Kejriwal, Analyst, Nuvama Wealth Management: are seeing the stock valuation thing.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): No, let me answer this question actually. Stock valuation is there everywhere, every time by every company, it’s done by every company, it’s a part of the P and L account. And now in this year, because there is a transition from last year to this year and as all of us know, coal prices are down. So when the coal prices are down in quarter one as compared to average of last year by around INR 6,000 or whatever it is, Based on that the cost of production is also quite less. And since cost of production is less and our stock utilization is taking place with respect to cost of production not NSR, that is why there is a hit on the stock utilization rate in stock acquisition and depletion.

And this impact is around INR $10.50 crores quarter one versus quarter one and around INR $9.50 crores quarter one versus quarter four. So this is just one time true up of the stock valuation rate in the stock acquisition and depletion.

Ashish Kejriwal, Analyst, Nuvama Wealth Management: It is related to coking coal only?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): It is mostly related to the coking coal. But other the cost is not only decided by coking coal, it’s based on the efficiency and other things, but impact of other items are pretty less as compared to the imported coal.

Ashish Kejriwal, Analyst, Nuvama Wealth Management: Okay. And secondly, on the CapEx side, have we got the approval from the Board on the CapEx side because we were telling that we were we were guiding that there would be new capacity announcements and all that part and we would be ordering or placing the orders for that capacity. So any update on that part?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes. We have got the got it approved 7,500 crores for this year is approved by the Gore and that is our target. And as you have mentioned about the new capacities, we have got the expansion plans in pipeline and the tendering activities are going on in Iskore Steel Plant, wherein we are planning to have 4,500,000 tonnes of expansion over there. And as I have already explained that the expenditure in that will generally start from the next year from 2020 to 2027, because the orders will be placed and then the other activities will start from next year and that is how the expenditures will start coming from the next year regarding that expansion. And back to back we are planning expansion in other plants as well in other facilities.

So those things will also follow going forward.

Ashish Kejriwal, Analyst, Nuvama Wealth Management: The

Conference Moderator: next question is from the line of Sumangal from Kotak Securities.

: Yes, sir. A couple of questions. First is, sir, given that the ISCO expansion will kind of pick up pace next year, the INR 7,500 crores could go to what number ballpark for FY 2027 CapEx?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): So actually, as we have discussed, after tendering and auto placement, the execution activity start and the expenditure will start from the next year. We are expecting a good jump as compared to INR7500 crores next year onwards. So the actual numbers will come only when the packages are crystallized. But then I can expect that a good jump will be there in the next year as compared to this year. Okay.

: And this ISCO will be roughly 4,000,000 tonnes new capacity and some debottlenecking, right, 5,000,000 tonne debottlenecking? Yes. So total, are looking at some I mean for ISCO only, what would be the total CapEx, somewhere around INR30000 INR35000 crores?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): You can say about ballpark INR 4,000 to

Amit Lahoti, Analyst, MK Global: INR 9,000 crores, 36,000 crores.

: Okay. And sir, we’ll be spending over three years, right, FY 2027, 2028 and 2029.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): INR forty to four years. Actually, after order placement, actually, is around thirty six months. That’s the guidance.

: Got it. Got it. So my second question is with respect to this NMBC contribution. Can you explain how is it getting accounted? Is the volume boosted because of that?

Or is it just some line item in revenue and some cost associated Mani:] with it?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): It’s basically it’s happening as a line item as well as a part of the stock as well. So that is how it is appearing right now in the books of accounts. And in the books, is very clear. Once we see it, we can understand.

: Okay. So can you explain what is the line, I mean revenue and cost contribution in 1Q for this?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): I mean, it’s kind of a purchase actually from their side. So in the stock, can see in purchase in the expenditure, can see it is purchase of stock in trade. It is operating as a percentage

Amit Lahoti, Analyst, MK Global: of stock in trade and it is

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): also there in the revenue side.

: Okay. And the volume of 4,550,000 ton, does it include anything from NMTC’s volumes also?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): In quarter one?

: Yes.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes, it includes around 370,000 tonnes from there.

: Okay. All right. And sir, what would be the margin contribution or difference between revenue and cost for

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): this? For financial? You’re talking

: about Yes, margin contribution of this NMDC marketing, we are doing?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): No, it is done based on an agreement between them and us and on that basis we do it.

: So at EBITDA level, it is neutral or is it positive, is it negative?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): It could be and details, it could be a little bit positive because which will be the compositive efforts being made by marketing

Conference Moderator: you to rejoin the question queue for follow-up questions.

: Just a clarification, just one last one. For this volume guidance of 17.5%, are we including NMDC’s volume in this or not including?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): 18.5.

: Sorry, 18.5, yes.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes, that is with respect to sale products. Okay, understood.

: Okay. I’ll join the queue back. Thanks.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Thank you.

Conference Moderator: Thank you. The next question is from the line of Vikas Singh from ICICI Securities. Please go ahead.

Ashish Kejriwal, Analyst, Nuvama Wealth Management: Sir, my first question is towards this railway pricing, this INR74000, which you said that this is finalized right now, what is the cost of basically production cost you are factoring especially the coking coal since coking coal has been declining? Is there a risk of this pricing coming down?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): See, let me try to clarify this point actually. This cost is done after is prepared after completion of the quarter and year and then it is also examined by different levels and then it will be done. So the point of 74,000 what you said is basically provisional guidance. It has nothing to do with the actual prices.

Ashish Kejriwal, Analyst, Nuvama Wealth Management: Noted sir, but then is there a because cooking coal prices have been come down significantly. Is there any cost advantage which you need to pass on to the railway in the subsequent quarters?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes, because if you remember, if you go back to one or two years, actually, price of rail price, the price of rail was pretty high as compared to what we are looking at right now. So this cost is examined by a competent authority at the government level and after thorough investigation, examination, the cost, cost, cost and everything and accounts everything, this is finalized. So the reflection of imported coal price is coming into the rail price itself after examination by the competent authorities. That is how it is coming. As coal prices soften, so the rail prices also soften that we must have already seen.

Because the gold price are at this level, so things will also be at this level.

Ashish Kejriwal, Analyst, Nuvama Wealth Management: Sir, in terms of our Premier Ford inventory, how much of inventory we are carrying and is that inventory is at the closing price of 1Q11? So there is a risk of markdown of these inventories as well going forward?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes. Let me answer this question actually. We are holding around 1,700,000 tonnes of sellable steel and 1,300,000 tonnes of in process stock. So these two put together steel stock, it is steel stock. And it is proved up to quarter one cost right now, which are almost at a very lower level.

That’s the reason why the stock related impact has come as we have already explained. So going forward, we do not see any further reduction in this. There could be improvement, but no reduction.

Conference Moderator: Sorry to interrupt, sir, but I may request you to rejoin the question queue for follow-up questions. The next question is from the line of Rahul Gupta from Morgan Stanley. Please go ahead.

Rahul Gupta, Analyst, Morgan Stanley: Yes. Hi. Thank you for taking my question. So just to understand, you have some finished some inventory of in person stock, and you are marketing NMBC steel products. So can you please help us understand how should we look at sales of NMBC steel from your end for rest of the year?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes, that is based on the contract and then their requirement, it is being done. So exact numbers, it will be very difficult to tell right now. Because plant is also sort of ramping up and they have their own ways of doing it. So as per the requirement and the quantity cannot be frozen at this point of time regarding NSL numbers.

Rahul Gupta, Analyst, Morgan Stanley: Okay, got it. And just to reconfirm 18,500,000 tonne volumes for fiscal twenty twenty six is excluding NMDC, right?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes, that is our target for steel production.

Rahul Gupta, Analyst, Morgan Stanley: Got it. Just one more question. Where are we in terms of coking coal inventory right now? And where is it compared to normal inventory days?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes. Let me tell you actually, poking coal inventory right now is around opening around anything between twenty five to thirty days in the course and could be around five days in the plan. So those are at the normal levels that we generally expect. We try to maintain those levels of twenty five days something like hovering around that. So right now the stocks are also at those levels.

Conference Moderator: The next question is from the line of Rashi Chopra from Citigroup.

Rashi Chopra, Analyst, Citigroup: Thanks. Just wanted to clarify the NSR, what is the blended NSR for this quarter?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): For this quarter, the average NSR is 51,700 per tonne.

Rashi Chopra, Analyst, Citigroup: And what was that in the fourth quarter?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): INR 50,100.

Rashi Chopra, Analyst, Citigroup: And for July?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): And for July, this figure is expected INR 50,000.

Amit Lahoti, Analyst, MK Global: Okay. Thank you.

Rashi Chopra, Analyst, Citigroup: And then on the coking coal side, you mentioned the blended coking costs were INR 16,900 crores. What was the imported coking coal?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): This is the imported coking coal is INR17600 crores and average was INR16900 crores.

Rashi Chopra, Analyst, Citigroup: And the imported coking coal was INR18500 in the fourth quarter, is that correct?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): In fourth quarter, INR18500 crores, you’re right.

Rashi Chopra, Analyst, Citigroup: Alright. And just last question on the inventory, that number 1,700,000 finished and 3,000,000 total, what was it in the March?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): In the March, it was 1,700,000 guidance, point four and one point three was 1.3. So basically, March was 1.4 plus 1.3 and thirtieth June is 1.7 plus 1.3.

Rashi Chopra, Analyst, Citigroup: Got it. And sorry, just one more question. NMDC’s deal, you indicated that the revenues were about INR1800 crores in this quarter. And the purchase on stock and trade that you mentioned is about INR2000 crores in the P and L, but

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Something will be in stock also. After purchase, something will be lying in the stock.

Rashi Chopra, Analyst, Citigroup: So is it fair to assume that you’re pretty much breaking even at N and M or there is something positive?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): That’s actually we do not have a negative, we have positive one in that.

Rashi Chopra, Analyst, Citigroup: Can you quantify that?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): It’s breakeven plus positive yesterday.

Amit Lahoti, Analyst, MK Global: The

Conference Moderator: next question is from the line of Tushar Chaudhry from Prabhudas Lehadar Private Limited. Go ahead.

Tushar Chaudhry, Analyst, Prabhudas Lehadar Private Limited: Good afternoon, sir. Thanks for the opportunity. Sir, this NMDC steel, you said only revenue and this raw material line gets affected in PP and L. There is nothing in other expenses, right? Or is there anything in other expenditure also?

Because this quarter’s other expenditure seems to be on a little bit on higher side, even if I look at on a per ton basis.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes. There is nothing of any sale in the other expenses. The other expenses are higher compared to last year quarter one, primarily because of royalty.

Tushar Chaudhry, Analyst, Prabhudas Lehadar Private Limited: Because of iron ore royalty?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Iron ore royalty.

Tushar Chaudhry, Analyst, Prabhudas Lehadar Private Limited: INR And the tendering process at ISCO had started last quarter. So how long do you think this will take?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): As per the scheduled dates given by them actually, order placements will take place in twenty five-twenty six.

Tushar Chaudhry, Analyst, Prabhudas Lehadar Private Limited: So order placement, do we expect by third quarter or fourth quarter?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): End of third quarter and fourth quarter, all of fourth quarter. I mean, the schedule is December, January like that.

Tushar Chaudhry, Analyst, Prabhudas Lehadar Private Limited: Okay. Okay. Thanks a lot, sir.

Conference Moderator: Thank you. The next question is from the line of Ashish from MLP. Please go

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): ahead. Can I take with the last question, please?

Amit Lahoti, Analyst, MK Global: Okay, sir. You, sir for the opportunity. Sir, one quick clarification. On the stock revaluation of INR950 crores, how much of it would be because of coking coal and how much of it would be because of finished steel?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): I mean it is on finished steel, it is on steel only, finished ethylene process put together and the reduction in the cost which is given $9.50 crores of adverse impact with respect to quarter four is primarily because of the imported coal price.

Amit Lahoti, Analyst, MK Global: Because I’m not able to understand.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): The imported coal price has come down around INR5000 to INR6000 per ton. That is why the cost of production is down in quarter one as compared to quarter four as well as previous quarter one. That is why the stabilization rate which is equal to the stabilization cost, so it has come down and it has got an impact of around INR $9.50 crores with respect to quarter four. So the reduction of cost is primarily in terms of the imported coal rate. Understood.

Amit Lahoti, Analyst, MK Global: So as so then is it fair to say that as the imported coal rates increases, then the impact to us would be much lower because then we will get a revaluation benefit on the upside?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes, of course, going forward, suppose the stock is lying over here or similar quantity or less quantity or more quantity. And if coal prices go up, then the stock relation rate will also increase and that will also increase the impact positive impact on this. And

Amit Lahoti, Analyst, MK Global: if I look at the next quarter versus this quarter, so we will not have this INR950 crores of impact, then INR250 crores of additional royalty or excess royalty because of the iron ore price, IBM price are now more or less flat. So that should not be there. And then there will be a negative impact because of realization. Is that the three variables that we should look at for the next quarter?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): These are the three basic reasons, actually, basic variables.

Amit Lahoti, Analyst, MK Global: Okay. Fair enough. Thank you.

Conference Moderator: Thank you. Ladies and gentlemen, we will take that as our last question. I would now like to hand the conference over to Mr. Ashish Kejewal from Nuwama Wealth for closing comments.

Ashish Kejriwal, Analyst, Nuvama Wealth Management: Yes. Thank you, Amshan. Sir, before we ask for the final call from you, just last question from main side. When you are talking about stock valuation impact, definitely, that’s there. But in other expenditure also, we are seeing it’s on a much higher side because more or less fourth quarter versus first quarter, it was flat despite the fact that volume was lower.

So we are more concerned about the higher other expenditure as compared to what it was in the fourth quarter. And secondly, in terms of valuation, when we are talking about INR $9.50 crore, assuming that nothing changes in second quarter, only price variation is there and cost is not going to change, then definitely second quarter versus first quarter, do you think that our earnings will be deviated only because of the price change, steel price change?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes. Let me answer one by one actually. So far as other expense is concerned, other expense within other expense, one of the major component is royalty. Apart from that handling and other expenditure is also there. So in the royalty front, because of the IBM pricing movement, so these figures also change.

In quarter one, the figures are higher. That is why other expense figure is higher. But this may vary from quarter to quarter depending on the IPM prices. Now coming to the stock relation rates because that was a one time kind of a hit in quarter one, so that it will not be there in quarter two, so it will give us a relief in quarter two and going forward. So the variability will be again be primarily driven by the NSR front.

And we are hopeful that we’ll be doing our production and technical parameters as per our own guidance. So primarily the NSRs will be driving the fluctuations.

Ashish Kejriwal, Analyst, Nuvama Wealth Management: Understood. So rightly you have pointed that base whatever we have given in first quarter from there to second quarter main variation is because of the steel price?

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes.

Ashish Kejriwal, Analyst, Nuvama Wealth Management: That’s great, sir. So if you can give the final remark, then we can close the call.

Ashok Panda, Director of Finance, Steel Authority of India Limited (SAIL): Yes. Thank you very much. While we are quite concerned about the global economic scenario and focus, the Indian economy has stood out as stronger with strong demand and consumption patterns. The forecast for Indian economy by various agencies have been quite encouraging and the economy is expected to grow in the range of 6.3% to 6.7% over next two years, which is enough to categorize it as the fastest growing amongst the major economies. The steel demand forecast by WSF for India are also quite promising in excess of 8%.

The government focus on infrastructure spending is a big boost to the economic in general and steel industry in particular. The residential sector is also expected to grow, backed by affordable housing projects and urban demand. India’s capital goods sector is also expected to benefit from the momentum in the infrastructure and investment in renewable energy. Automotive and consumer deliverables are expected to maintain healthy growth driven by sustained growth in private consumption. The company remains committed towards improving operational efficiencies and with the market expected to be more good in supportive in coming quarters, I am hopeful that the good times await us and our investors going forward.

Thank you very much for this interaction.

Conference Moderator: Thank you. On behalf of Nuvama Wealth Management, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

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