Synopsis: Mid-Cap company posted strong Q4FY26 results with net profit surging 390.6% QoQ to ₹1,835 crore and announced a ₹2.35 dividend. Despite this, Morgan Stanley and Citi remain cautious, maintaining Underweight/Sell ratings due to margin and leverage concerns.
The shares of a Mid-Cap company specialising in the manufacturing, processing, and distribution of a wide array of iron and steel products, are in focus in the day’s trade following their Q4 results and the brokerage views.
With a market capitalization of Rs. 78,698.91 crores in the day’s trade, the shares of Steel Authority of India Ltd rose upto 0.85 percent, making a high of Rs. 194.00 per share compared to its previous closing price of Rs. 192.35 per share.
What happened
Steel Authority of India Ltd, engaged in the manufacturing, processing, and distribution of a wide array of iron and steel products, is in focus following their Q4 results and Brokerage views.
Its revenue from operations increased by 5.1 percent YoY from Rs. 29,316 Crores in Q4FY25 to Rs. 30,813 Crores in Q4FY26, while it increased by 12.6 percent QoQ from Rs. 27,371 Crores in Q3FY26 to Rs. 30,813 Crores in Q4FY26.
Its net profit increased by 46.8 percent YoY from Rs. 1,251 Crores in Q4FY25 to Rs. 1,835 Crores in Q4FY26, while it increased by 390.6 percent QoQ from Rs. 374 Crores in Q3FY26 to Rs. 1,835 Crores in Q4FY26. The earnings per share (EPS) for the quarterly period stood at Rs. 4.44, compared to Rs. 3.03 in the previous year’s quarter.
Along with it, the Board of Directors have recommended the Final Dividend of Rs. 2.35/- per equity share of Rs. 10/- each for the Financial Year 2025-26 (23.50% of the paid-up equity share capital of the Company).
Brokerage views
Morgan Stanley on SAIL
Morgan Stanley maintains an Underweight stance with a target price of Rs. 140, indicating a cautious outlook on the stock despite near-term operational trends. The brokerage noted that EBITDA came in below expectations, primarily driven by weak steel volumes and softer realisations, which weighed on overall performance in the quarter. This reflects continued pressure on core profitability metrics.
Looking ahead, Q1FY27 margins are expected to improve due to higher steel prices, offering some near-term support. However, FY27 volume guidance is viewed as optimistic, suggesting limited visibility on sustained demand strength and leaving room for execution risk.
Citi on SAIL
Citi has maintained a Sell rating while raising its target price to Rs. 180 from Rs. 135, reflecting some near-term strength in the stock but continued caution on fundamentals.
The brokerage highlighted that Q4 performance was strong, supported by better operational outcomes. However, it believes this strength may not be sustained, as EBITDA per tonne is likely to have peaked, indicating potential margin pressure ahead. Citi also warned that the company’s debt-to-EBITDA ratio could rise, suggesting increasing leverage risks if earnings normalise or weaken in upcoming quarters.
Company Overview & Others
Steel Authority of India Limited (SAIL) is one of India’s largest steel-producing companies and a major public sector enterprise under the Government of India. Established in 1973, the company operates several integrated steel plants across the country and manufactures a wide range of steel products used in construction, infrastructure, railways, automotive, and engineering sectors. SAIL plays a key role in supporting India’s industrial and infrastructure development.
The company has a strong nationwide presence with large production facilities and an extensive distribution network. SAIL focuses on modernisation, operational efficiency, and sustainable steel production to remain competitive in the growing global steel industry. With consistent government support and increasing demand for steel in infrastructure and manufacturing, the company continues to be an important contributor to India’s economic growth.
The company demonstrates a decent financial profile with a Return on Capital Employed (ROCE) of 7.79% and a Return on Equity (ROE) of 6.43%, indicating moderate efficiency in utilizing capital and generating returns for shareholders. Its debt-to-equity ratio of 0.53 reflects a balanced capital structure with manageable leverage, reducing financial risk while still supporting growth.
Additionally, the company’s PEG ratio of 0.81 suggests the stock may be reasonably valued relative to its expected earnings growth. The business has also maintained a healthy dividend payout ratio of 27.9%, highlighting a consistent approach toward rewarding shareholders while retaining sufficient earnings for future expansion.
Mining, Production & Sales Performance
Mining output included 38.070 MT of iron ore, 0.728 MT of limestone, and 0.551 MT of dolomite, reflecting the raw material base supporting operations. On the production and sales side, the company produced 20.483 MT of hot metal, 19.434 MT of crude steel, and 19.177 MT of saleable steel. Total sales stood at 19.932 MT, comprising 19.667 MT domestic sales and 0.266 MT exports.
ISP Sales – Product Mix
The product mix is led by HR Plates/Coils/Sheets at 29%, followed by Bars & Rods at 22.8% and PM Plates at 15.9%, indicating a strong skew towards core flat and long steel products. Structural steel contributes 8.4%, while railway products account for 7.8% of the mix.
Smaller segments include Semis at 7.1%, CR Coils/Sheets at 6.3%, Galvanised Products at 1.3%, and PE Products at 0.8%, reflecting a relatively limited presence in coated and specialised value-added categories.
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