Views on SAIL 3QFY2014 results - Angel Broking

Views of Mr. Bhavesh Chauhan (Sr. Research Analyst - Metals & Mining, Angel Broking) on SAIL 3QFY2014 results:

SAIL's PAT above estimates

"SAIL's 3QFY2014 net profit came in above our estimates mainly due to lower-than-expected staff costs. SAIL's standalone net sales increased by 8.3% yoy to Rs. 11,363cr, below our estimate of Rs. 11,566cr. Its sales volumes grew by 8.4% yoy to 2.98mn tonnes while realizations were flat yoy to Rs. 38,130/tonne. Its employee costs grew by 9.0% yoy to Rs. 2,268cr and was below our estimate. However, other expenditure grew by 21.0% yoy to Rs. 10,327cr resulting in flattish EBITDA on a yoy basis at Rs. 1,132cr, representing an EBITDA margin of 10.0%. It reported an exceptional item of Rs. 20cr related to forex gain (forex loss of Rs. 31cr in 3QFY2013). Adjusting these exceptional item, its adjusted net profit remained flat yoy at Rs. 513cr (ahead of our estimate of Rs. 379cr). Its reported net profit stood at Rs. 533cr. Looking ahead, we expect SAIL's operational and financial performance to be affected by 1) inability to maintain/raise sales volumes amidst slower demand growth; 2) higher fixed (employee )costs, and 3) delays/cost overruns in its brownfield expansion projects. Hence, we recommend Neutral rating on the stock."

SAIL 3QFY2014 Result Review (CMP: Rs. 61/ Target Price: NA/ Recommendation: Neutral)

Source : Equity Bulls

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