Summary
Steel Authority of India Limited - Q3 FY26 Earnings Call Summary Monday, February 02, 2026 11:30 AM
Event Participants
Executives 1 Ashok Panda (Director - Finance)
Analysts 5 Amit Lahoti (Emkay), Ashish Kejriwal (Nuvama Institutional Equities), Pallav Agarwal (Antique Stock Broking), Pinakin Parekh (HSBC), Rashi Chopra (Citigroup), Sumangal Nevatia (Kotak Securities), Tushar Chaudhari (Prabhudas Lilladher), Vikas Singh (ICICI Securities)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (9M FY26) | ₹79,997 crores | +9% YoY, driven primarily by volume growth. |
| PAT (9M FY26) | Not Stated (Absolute) | +60% YoY, attributed to operational efficiency, inventory liquidation, and lower interest costs. |
| Sales Volume (9M FY26) | 14.6 million tonnes | +16.3% YoY, included ~1 million tonnes of NSL (NMDC Steel) volume. |
| Crude Steel Production (9M) | 14.35 million tonnes | +2% YoY, growth remained steady despite temporary operational disruptions. |
| Average NSR (Q3) | ₹47,735 per tonne | Sequential decline from ₹48,836 in Q2; Flat products saw a sharper decline vs Long. |
| Gross Debt Reduction (9M) | ~₹5,000 crores | Strategic focus on deleveraging; additional ₹2,000 crore reduction achieved in January alone. |
| Coking Coal Cost (Q3) | ₹18,351 per tonne | Marginally higher than Q2; management expects a ₹1,500/tonne spike in Q4 due to spot price lags. |
| Interest Cost (9M) | ₹500 crores (Savings) | On track to save ₹1,000 crores for the full year due to aggressive debt repayment. |
Geographic & Segment Commentary
- Domestic Market: Consumption grew by 7% YoY during 9M FY26; management noted stability returning in December after a subdued September-October. India has returned to being a net exporter with 33% export growth and a 37% reduction in imports.
- Product Mix (Semis): Semi-finished steel currently accounts for 10% of the mix; the company aims to reduce this to near-zero within 18-24 months via new TMT mills and conversion contracts.
- NSL Arrangement: SAIL sold 0.37 million tonnes of NMDC Steel (NSL) products in Q3; the arrangement focuses on the South Indian market with small but positive margins.
Company-Specific & Strategic Commentary
- IISCO Expansion: A ₹36,000 crore expansion project is underway with major packages ordered; management expects EBITDA to exceed ₹10,000/tonne from this facility upon completion by FY30.
- Operational Recovery: Disruptions at Bokaro and Bhilai SMS units have been resolved; all five integrated steel plants (ISPs) are currently operating at near 100% capacity.
- Cost Optimization: Structural savings are being achieved through increased Renewable Energy (RE) sourcing; employee costs are also declining as the legacy workforce shrinks (current headcount ~50,000).
- Inventory Management: Total inventory reduced from 2.7 million tonnes (March) to 2.4 million tonnes; aggressive liquidation is funding CAPEX and debt reduction.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| CAPEX (FY26) | ₹7,500 - ₹10,000 crores | Increased from initial guidance to accommodate expansion activities. |
| CAPEX (FY27) | ₹15,000 crores | Sharp increase driven by heavy outflows for IISCO modernization. |
| Hot Metal Production (FY27) | 22.5 million tonnes | Target up from ~20.5-21.0 million tonnes expected in FY26. |
| Sales Price (Q4 FY26) | Upward Trend | ₹2,000-₹3,500/t hikes taken in Jan; further upward movement expected in Feb/March to offset coal costs. |
| Saleable Steel (FY27) | 21 million tonnes | Excludes potential supplemental volumes from NSL arrangement. |
Risks & Constraints
| Risk | Context |
|---|---|
| Coking Coal Volatility | Spot prices have surged to $251/tonne; while inventory buffers provided a Q3 gain, a ₹1,500/tonne cost hit is expected in Q4 consumption. |
| Operational Reliability | Recent incidents at Bokaro and Bhilai impacted short-term production; management is implementing “tube leakage” prevention and cable protection to mitigate future risks. |
| Margin Compression | While steel prices are rising, they are moving “in tandem” with coal; real margin expansion depends on the successful pass-through of costs to the domestic market. |
Q&A Highlights
Price Realization Trends
- Question: What were the price increases taken in December and January? (Pinakin Parekh)
- Answer: Market improved mid-December; January saw hikes of ₹2,000-₹2,500 in long products and ₹3,300-₹3,500 in flat products. Full impact will be visible in February. (Ashok Panda)
Expansion and Margins
- Question: How much will the IISCO expansion benefit margins? (Amit Lahoti)
- Answer: Current EBITDA is hovering around ₹6,000-₹7,000/tonne. The new IISCO facilities are expected to deliver over ₹10,000/tonne. (Ashok Panda)
Employee Costs and Wage Revision
- Question: Why did employee costs decline sequentially and what is the outlook for wage revision? (Vikas Singh)
- Answer: Q2 was higher due to a one-time gratuity hit; Q3 normalized. The next mandatory wage revision is not until January 2027, impacting FY28. (Ashok Panda)
Inventory and Debt
- Question: What is the status of inventory and its impact on debt? (Ashish Kejriwal)
- Answer: Inventory reduced by 0.3mt in 9M; expect another 0.6mt reduction in Q4. This has already lowered interest costs by ₹500 crores in 9M, aiming for a ₹1,000 crore total reduction for the year. (Ashok Panda)
Key Takeaway
SAIL reported a resilient nine-month performance with PAT increasing 60% YoY, driven by a 16.3% growth in sales volume (14.6 million tonnes) and aggressive inventory liquidation. The company utilized this cash flow to reduce debt by approximately ₹7,000 crores by January 2026, leading to significant interest cost savings. While Q3 realizations were pressured in the flat segment, management has implemented ₹2,000–₹3,500/tonne price hikes in January to counter rising coking coal costs, which are expected to spike by ₹1,500/tonne in Q4. Strategically, SAIL is pivoting toward a ₹36,000 crore IISCO expansion and aiming to eliminate semi-finished steel from its mix within 24 months. Looking ahead, management targets 22.5 million tonnes of hot metal production for FY27 and remains focused on deleveraging to fund a doubling of CAPEX to ₹15,000 crores in the next fiscal year. Volatile global coal prices and operational consistency across its aging plants remain the primary watch points.
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