Buy This Large Cap Stock For A Return of 45.3% In 1 Year Says Kotak Securities

The brokerage firm, Kotak Securities, has recommended buying Steel Authority of India (SAIL) stock at a target price of Rs 170 per share, from the current market price of Rs 117, for a gain of 45.3 percent in a year. Steel Authority of India Limited (SAIL) is one of India's leading steel producers and one of the country's Maharatnas of Central Public Sector Enterprises.

Q2 FY’22 results of the company

In the second quarter of FY'22, SAIL reported a consolidated net profit of Rs 4339 crore. According to SAIL's performance in Q2 FY'22, Crude Steel Production totaled 4.468 million tonnes, Saleable Steel Sales remained 4.280 million tonnes, and Gross Borrowings were Rs 22,478 crore as of 30 September 2021, down from Rs 35,350 crore as of 31 March 2021, a reduction of Rs 12,872 crore during H1 FY'22. The company's board of directors has declared an interim dividend of Rs 4 per share to shareholders for FY'22.

Date: 29.10.2021	Standalone	In Rs (Cr)	In Rs (Cr)	In Rs (Cr)	Consolidated	In Rs (Cr)	In Rs (Cr)	In Rs (Cr)
	Q1 FY'22	Q2 FY'22	H1 FY'22	H1 FY'21	Q1 FY'22	Q2 FY'22	H1 FY'22	H1 FY'21
Revenue from Operations	20642	26827	47469	25991	20643	26828	47471	25993
EBITDA	6674	7248	13921	1973	6741	7290	14031	2078
PBT	5145	5753	10898	-1374	5212	5795	11007	-1270
PAT	3850	4304	8154	-877	3897	4339	8236	-790
Source: sail.co.in

Buy Steel Authority of India (SAIL) with a target price of Rs 170 says Kotak Securities

Kotak Securities has said "SAIL's EBITDA/ton increased 18% QoQ to a record high of Rs19,728/ton on higher steel prices. SAIL's expansion projects are at the last stage of completion, we conservatively build +7% YoY volume in FY22E versus guidance of 11%. We expect SAIL's EBITDA to grow at 10% CAGR over FY21-24E."

The brokerage has claimed in its research report that "SAIL reduced net debt by Rs4200 cr in 1QFY22, aided by strong operational cash flows and measured CAPEX. We estimate net debt to reduce further to Rs19500 cr as of FY22E, aided by strong margins. We estimate that SAIL's future growth CAPEX would be funded by Operating Cash Flow assuming mid-cycle margins from FY2023E and net debt/EBITDA to remain below 1X."

Disclaimer

This stock is picked from the brokerage report of Kotak Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.