Steel Authority of India Ltd (Rs.119.10): Buy

T: Rs.175

Book Value : ₹131.08

Trailing P/E : ~23.27

Forward P/E : Estimated at 11.96.

P/B : 0.97

EPS: Rs.7.42

Debt to Equity Ratio: 0.89

Price-to-Sales Ratio: 0.51

Enterprise Value/EBITDA: 4.73

Introduction: Steel Authority of India Limited (SAIL) is a government-owned enterprise operating under the administrative control of the Ministry of Steel, Government of India. Established in 1973, SAIL is one of the largest state-owned steel-making companies in India. The Government of India holds approximately 75% of the company’s equity, making it a public sector enterprise (PSU). Photo: SAIL

Products:

SAIL manufactures and sells a wide range of high-quality steel products that cater to various industries, including construction, infrastructure, defense, railways, automotive, and engineering. Key product offerings include:

💢Pig Iron: Used as raw material in the steelmaking process.

💢Cold Rolled Products: Widely used in automotive and construction industries due to their smooth finish and strength.

💢Pipes: Manufactured for use in oil and gas pipelines, water supply, and structural purposes.

💢Semis and Structurals: Essential for construction projects and industrial applications.

💢SAIL TMT Bars: These are high-strength thermo-mechanically treated bars used in reinforced concrete construction, meeting international quality standards. SAIL also produces value-added products like plates, coils, and stainless steel.

Plants:

SAIL operates a network of five integrated steel plants located in:

💢Bhilai (Chhattisgarh): Renowned for producing rails, long products, and plates.

💢Bokaro (Jharkhand): Focuses on flat products like hot-rolled coils and cold-rolled products.

💢Durgapur (West Bengal): Specializes in long products, including structural steel and wire rods.

💢Rourkela (Odisha): Produces plates, hot-rolled and cold-rolled products, and special-grade steels.

💢Burnpur/IISCO (West Bengal): One of India’s oldest steel plants producing both long and flat products.

Additionally, SAIL runs three special steel plants:

Alloy Steels Plant (ASP) in Durgapur: Produces alloy and special steels for defense, power, and automotive sectors.

Salem Steel Plant (SSP) in Tamil Nadu: Focuses on stainless steel production.

Visvesvaraya Iron and Steel Plant (VISP) in Karnataka: Primarily produces alloy and special steels.

Moreover, SAIL operates a Ferro Alloy Plant in Chandrapur (Maharashtra), which manufactures manganese-based alloys, a key input in steelmaking.

Research and Development:

SAIL places strong emphasis on R&D and innovation, with its R&D Centre for Iron & Steel (RDCIS) located in Ranchi, Jharkhand. This center is focused on developing new steel grades, improving process efficiency, and environmental sustainability. SAIL also has a Centre for Engineering in Ranchi, which provides advanced technological support for the design and development of its plants.

RDCIS has been instrumental in advancing SAIL’s technological capabilities, with a focus on reducing costs, enhancing product quality, and adopting environmentally sustainable practices like reducing carbon emissions.

Patents:

SAIL is a leader in intellectual property in India, holding the highest number of patents in the steel industry. Globally, the company has filed 692 patents, of which 343 have been granted. These patents reflect SAIL’s commitment to innovation, particularly in areas like energy conservation, steel quality enhancement, and environmental safety.

Global Presence:

Although SAIL’s primary operations are in India, it has expanded its footprint globally by exporting high-grade steel products to over 50 countries across five continents. Key markets include Europe, Africa, the Middle East, and Southeast Asia, which demand products like hot-rolled coils, billets, and structural steel.

Headquarter:

SAIL is headquartered in New Delhi, India. The company’s presence spans the entire country with regional offices, sales branches, and warehouses to serve both domestic and international customers efficiently.

The SAIL operates 24 mines across India. These mines are primarily spread across Jharkhand, Odisha, Chhattisgarh, and Madhya Pradesh, providing key raw materials like iron ore, limestone, and dolomite to SAIL's steel plants.

P/E Ratio:

The high P/E ratio indicates that SAIL is currently trading at a higher valuation compared to its peers in the steel industry, suggesting strong investor expectations for growth or profitability relative to its earnings.

Some of the key mines include:

💢Chiria Mines (Jharkhand) - One of India's largest iron ore mines.

💢Gua Ore Mines (Jharkhand).

💢Bolani Mines (Odisha).

💢Barsua Mines (Odisha).

💢Tulsidamar Dolomite Mine (Jharkhand).

💢Kuteshwar Limestone Mines (Madhya Pradesh).

These mines are integral to SAIL's raw material division, ensuring a steady supply of materials for steel production.