SAIL: Q1FY15 Result Analysis

One of the Maharatna companies, Steel Authority of India (SAIL) announced its first quarter (April-June) results today and was able to beat the consensus analyst forecast. SAIL saw its profit after tax jumping by 17.5 per cent on yearly basis to Rs 529.88 crore against the analyst estimates of around Rs 400 crore. This was helped by better sales growth, lower raw material cost and absence of any exceptional that were there in last fiscal same quarter.

Total income of the company has increased by 10.45% on yearly basis to Rs 11341 crore. This was on back of both better realisation as well as higher volume growth. Net sales realisation of company increased from Rs 35777 per tonne at the end of Q1FY14 to Rs 36588 per tonne for Q1FY15. The volumes too jumped from 2.62 MT to 2.76 MT in the same duration. Cost of raw material for the company came down from 46% of net sales at the end of Q1FY14 to 39.55% of net sales at the end of Q1FY15.

On absolute basis it has come down by 5% in the same period to Rs 4428 crore for Q1FY15. Lower coking coal prices and stable INR against USD helped in controlling consumption of raw material. All this helped company to post better operating profit growth of 16% on yearly basis. Nonetheless, not everything is good about the result as we saw interest cost of the company increasing by 59% on yearly basis to Rs 304.96 crore for quarter ending June 2014. Moreover, last year same quarter company had exceptional item to the tune of Rs 88 crore which depressed last year profit and hence growth in profit of this quarter looks better.  Excluding the exceptional numbers of last year same quarter, profit of the company for this quarter would have remained flat.

Company came out with its number during the trading hours today and post these numbers shares of the company saw a spurt and closed up by 2.03% from its previous close.