Steel Authority of India Ltd (SAIL), India’s leading state-owned steel producer, released its financial results for the third quarter of FY2025, reflecting significant declines amid persistent pressure from rising expenses and market challenges. The company's consolidated net profit plummeted over 66% to ₹141.89 crore from ₹422.92 crore reported during the same quarter last year. This stark decrease has raised concerns among investors and market analysts about the sustainability of SAIL’s financial health.
According to the company's announcement on February 11, 2025, SAIL's revenue from operations experienced modest growth, recording ₹24,490 crore, which marks a 5% increase from ₹23,349 crore for the corresponding period of the previous fiscal year. Despite this revenue growth, the profit after tax (PAT) saw a catastrophic decline of 84% sequentially, down from ₹897 crore reported for the previous quarter.
SAIL’s operating expenses surged to ₹24,560 crore, significantly up from ₹23,824 crore recorded in the prior quarter and ₹23,141 crore from the same period last year. Such rising costs included expenses related to materials consumed, employee benefits, and financing. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) also sunk to ₹2,029.6 crore, representing a decline of 5.3% year-on-year.
The company’s EBITDA margin contracted to 8.3%, down from 9.2% over the last year, highlighting the operational challenges SAIL is facing amid volatile market conditions. Amarendu Prakash, the Chairman of SAIL, acknowledged the difficulties, citing, "We expect with appropriate interventions, the issue of cheap imports will be addressed, and the government's drive on infrastructure development will bode well for the domestic steel industry…" This optimism reflects SAIL's commitment to improving production efficiency and exploring greener technologies.
On the standalone level, the company's PAT fell even more steeply, declining 62% to ₹126 crore from ₹331 crore year-on-year. While analysts had anticipated some challenges, the overwhelming nature of the profit drop has prompted economic observers to reassess the company’s near-term outlook.
Despite this troubling news, market reactions have been somewhat mixed. Following the earnings announcement, shares of SAIL closed down 4.71% at ₹100.15 on the Bombay Stock Exchange, steeply lower than their peak of ₹175.65 from May 2025. Investors are now weighing the current price against the backdrop of SAIL's improved sales volume, which rose from 3.81 million tonnes to 4.43 million tonnes year-on-year.
Analysts guided investors to closely monitor SAIL's operational adjustments, as declining steel prices and increased cheap imports continue to affect profitability. According to Anshul Jain, Head of Research at Lakshmishree Investment and Securities, "Despite the profit slump, revenue from operations rose 4.9 percent… driven by higher sales volumes." This indicates resilience amid challenging conditions, though the declining margins raise concerns about the company’s ability to maintain profitability.
Looking forward, market discourse suggests cautious optimism. Several analysts feel the downward trend on share prices may soon meet resistance, predicting stabilizing share values around ₹95 to ₹105. If SAIL can navigate the current challenges, including controlling costs and managing pricing pressures, there is potential for recovery.
Investors are encouraged to remain vigilant. With SAIL's current stock performance and market conditions, experts recommend holding shares and potentially considering buying if prices breach resistance levels. The overall sentiment, following the latest results, suggests caution tempered by hope for strategic interventions to improve operational efficiency.
SAIL's future will depend on its ability to adapt to the changing market dynamics, ramp up production efficiency, and respond to the government's infrastructural initiatives. The steelmaker is currently at a pivotal juncture where strategic decisions could either mitigate the challenges or exacerbate financial woes, prompting stakeholders to keep their eyes firmly on the coming developments.