SAIL - Shifting goalposts - Espirito Santo Securities

Whilst we like SAIL's ongoing modernization and expansion plans, it's a FY15 story. Our channel checks indicate work is progressing at break neck speed at Rourkela Steel Plant (RSP) and IISCO, however with crucial links of the material flow chain expected to come with a lag, we think the actual benefits of expansion will only be seen from FY15 onwards.

Lack of adequate progress in its raw material division (RMD) or the captive mines under Bhilai Steel Plant (BSP) could adversely impact SAIL's key profitability driver i.e. mining profits.

Even after correcting 45% we stick to our guns and maintain our SELL rating on account of structural concerns. Our revised FV is Rs63/share (from Rs94).

Source : Equity Bulls

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