Revenue
Margin
Demand
Guidance
Tone
Event Participants
Executives
1 Dr. Ashok Panda (Chairman & Managing Director; Additional Director - Finance present, unnamed)
Analysts
11 Akhilesh Kumar (Emkay Global Financial Services), Alok Deora (Motilal Oswal Financial Services), Amit Murarka (Axis Capital), Netra Deshpande (Mirae Asset Sharekhan), Pallav Agarwal (Antique Stock Broking), Parthiv (Anand Rathi Group), Pinakin Parekh (HSBC Bank), Rajesh Ravi (HDFC Securities), Ritesh Shah (Investec India), Sumangal Nevatia (Kotak Mahindra Bank), Vikash Singh (ICICI Securities)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Crude steel production | 4.8 million tonnes | Down ~2% YoY (4.9 mt CPLY); decline by design as major capital repairs at IISCO, Durgapur, Rourkela & Bokaro were advanced into Q1 to free capacity from Q2 onward |
| Saleable steel sales volume | 4.2 million tonnes | Down 7-8% YoY; finished goods inventory up 0.2 mt; management committed to FY27 volume growth with inventory liquidation in H2 |
| Sales turnover | ₹26,100 crores (implied) | Up >1% YoY on better realizations despite lower volumes; implied from stated EBITDA of ₹4,356 crores and 16.7% EBITDA margin |
| Blended NSR (realization) | ₹57,100 per tonne | Up ~₹5,000/tonne vs Q4 FY26 (₹52,000); Q1 split: flats ₹57,200, longs ₹57,100 |
| Imported coking coal cost | ₹21,300 per tonne | Up ₹3,100/tonne vs Q4 FY26 (₹18,100) on Middle East supply disruptions; Argus index softening to ~220 from 235 peak |
| EBITDA | ₹4,356 crores | Up ~49% YoY from ₹2,925 crores (management cited >50%); driven by better realizations, operational efficiencies, treasury management |
| EBITDA margin | 16.7% | Best since FY22 (2021-22) when steel prices peaked and coal prices bottomed |
| EBITDA per tonne | ₹10,464 | Crossed the ₹10,000/tonne benchmark for the first time |
| PBT | ₹2,159 crores | Up ~143% YoY from ₹890 crores |
| PAT | ₹1,636 crores | Up ~139% YoY from ₹685 crores |
| Total borrowings | ₹21,729 crores | Flat vs ₹21,663 crores at FY26 start despite 0.2 mt inventory build; further reduced to ~₹21,400 crores post-quarter |
| Debt-equity ratio | 0.36x | Down from 0.38-0.39x at FY26 start; continued deleveraging |
| Cost of debt | 6.24% | Vs ~6.8% in Q1 FY26; treasury efforts yielded ~₹100 crores finance cost saving in the quarter |
| Employee cost | ₹2,937 crores | Flat YoY vs ₹2,944 crores CPLY; includes VRS payouts, headcount declining |
| Capex (Q1 spend) | ₹2,575 crores | Vs ₹2,306 crores planned for Q1; full-year FY27 target ₹15,000 crores |
Geographic & Segment Commentary
- Flats & Longs: Production mix was ~53% flats, ~35% longs and 12.5% semis; semis share down from 14% CPLY as SAIL converts more output to finished steel (finished steel share up to ~89% from 86%). Q1 realizations were near-identical for flats (₹57,200) and longs (₹57,100); July realizations slipped to ₹56,900 (flats) and ₹54,200 (longs) on seasonal weakness, with longs showing early recovery momentum.
- Semis & Third-Party Marketing: Semis comprised only ~6% of sales post-conversion; NMDC Steel marketing volumes were zero in Q1 (vs 3.73 lakh tonnes CPLY) while RINL contributed 96,000 tonnes of semis through SAIL's marketing setup (vs nil CPLY); combined third-party volume was 0.96 lakh tonnes vs 2.76 lakh tonnes CPLY.
- Captive Iron Ore & Sub-Grade Fines: Q1 external ore sales reached 1.1 million tonnes vs 0.31 million tonnes CPLY, generating revenue of ₹574 crores (vs ₹157 crores) and ~₹150 crores EBITDA; FY26 full-year sales were ~3.5 million tonnes from Odisha group mines; FY27 target is 8 million tonnes. Sub-grade fines inventory stands at 32 million tonnes, with 3 million tonnes put to auction — the first step toward monetization; Chhattisgarh auctions fructified in Q2 and Jharkhand sales are being pursued.
- Coking Coal & Raw Materials: Blended sourcing is 85% imported / 15% indigenous, split as 62% imported hard coking coal, 23% imported soft coking coal and 15% indigenous; average Q1 cost differential is material — imported ₹21,200 vs indigenous ₹13,100, with own-captive coal at ~₹6,000/tonne. Tasra captive mine production from December 2026 will lift the low-cost indigenous share.
Company-Specific & Strategic Commentary
- Planned Capital Repairs: Major capital repairs at IISCO, Durgapur, Rourkela and Bokaro were deliberately advanced into Q1 so plants run unencumbered in subsequent quarters — the production and volume decline is by design, not operational weakness.
- Mine Monetization: Core strategic focus is raising captive mine output and selling surpluses; Odisha group mine sales more than doubled YoY (₹400 crores incremental revenue, ₹150 crores incremental profit), with Chhattisgarh and Jharkhand expansion underway.
- Treasury & Deleveraging: Cost of debt cut to 6.24% from
6.8% YoY (₹100 crores quarterly finance-cost saving); D/E improved to 0.36x and borrowings stayed flat despite inventory build — supporting EBITDA-to-cash conversion. - Expansion Pipeline: CapEx ramps from ₹15,000 crores (FY27) to >₹20,000 crores (FY28) and ₹25,000-26,000 crores thereafter for the next 4-5 years; IISCO expansion targets ₹3,000-4,000/tonne variable cost reduction by FY29; Durgapur TMT bar mill (0.8-0.9 million tonnes) due September-December 2027 to absorb excess semis.
- Market Protection: Safeguard duty of 11.5% remains in force (year 2 of 3); anti-dumping investigation on steel is ongoing with relief expected; definitive ADD on met coke does not impact SAIL as captive coke capacity matches or exceeds requirement.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Sales volume | FY27: growth over FY26 maintained | Q1 dip was design-led; production to exceed last year in Q2 and Q4; no inventory build targeted in Q2, with liquidation in Q3-Q4 |
| Blended NSR | Q2 FY27: down ₹1,000-2,000/tonne QoQ (directional) | Seasonal monsoon weakness; longs fell ~₹3,000 June-July but recovering ₹500-1,000; flats down ~₹1,000; post-monsoon price momentum expected |
| Imported coking coal cost | Q2 FY27: down ₹1,200-1,500/tonne vs Q1 | Argus index softening; expected monthly reduction of ₹1,000-2,000 from August onward |
| Capex | ₹15,000 crores FY27; >₹20,000 crores FY28; ₹25,000-26,000 crores thereafter | Ramping for expansion; Q1 spend of ₹2,575 crores vs ₹2,306 crores plan |
| Iron ore external sales | 8 million tonnes target FY27 | Vs ~3.5 million tonnes FY26; plus 3 million tonnes sub-grade fines auction target; contingent on logistics and auction outcomes |
| Cost reduction | ₹2,000-3,000/tonne in FY27; net ~₹2,000/tonne by FY29 | IISCO variable cost savings of ₹3,000-4,000/tonne partially offset by ₹1,500-2,000/tonne fixed cost increase |
| Wage revision provision | Q4 FY27 evaluation | Pay commission due January 1, 2027; quantum not yet determinable; VRS reducing employee base |
| Rail price finalization | FY26 final pricing expected higher than provisional | Provisional price of ₹74,000 was set when coal prices were low; no further P&L hit expected; final prices declared in FY27 |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical (Middle East) | Strait of Hormuz-related disruptions hit fuel, limestone, gas and propane supply chains and pushed up ocean freight. SAIL's captive gas generation limited fuel impact, but flux costs rose — offset by lower specific usage, yielding ~₹25 crores savings in Q1. |
| Imported coking coal volatility | Q1 cost of ₹21,300/tonne vs ₹18,100 in Q4; index peaked at 235 before softening to 220. Management expects progressive softening, but the trajectory depends on global demand and monsoon-season dynamics. |
| Steel imports | Net imports rose to 0.4-0.5 million tonnes in Q1 vs ~0.3 million tonnes CPLY; imports growing faster than exports despite the 11.5% safeguard duty. Anti-dumping investigation outcome is pending. |
| Monsoon seasonality | Q2 is traditionally the toughest quarter for steel demand and pricing; management guides NSR down ₹1,000-2,000/tonne QoQ and will avoid inventory build during the quarter. |
| Iron ore logistics | Rail/road constraints persist for Odisha and Jharkhand mine dispatches; being managed via road movement and improved rake availability. Sub-grade fines (56-60% Fe) have good market demand, supporting the 3 million tonnes auction target. |
| Wage revision (pay commission) | Effective January 1, 2027; quantum unknown and provision decision deferred to Q4 FY27. VRS is reducing headcount and keeping Q1 employee cost flat YoY. |
| Rail price finalization | Provisional price of ₹74,000 was fixed when coal was cheaper; final FY26 pricing expected higher given elevated coal costs, but timing and extent of revision are uncertain. |
Q&A Highlights
Q2 Pricing & Coal Cost Guidance
- Question: What were Q1 NSR and coal costs versus Q4, and what is the Q2 trajectory? (Alok Deora, Motilal Oswal)
- Answer: Q1 NSR was ₹57,100 vs ₹52,000 in Q4; imported coal was ₹21,300 vs ₹18,100. Q2 NSR is expected to decline ₹1,000-2,000 QoQ on seasonal weakness; longs fell ~₹3,000 between June-July with ₹500-1,000 recovery visible, flats down ~₹1,000. Coal costs are softening — ₹1,000-2,000 per month from August, with Q2 consumption cost down ₹1,200-1,500 vs Q1. Full-year volume growth guidance maintained. (Dr. Ashok Panda)
Trade Protection & Market Structure
- Question: How wide is the primary-secondary TMT price gap, and what relief can be expected from safeguards/ADD? (Ritesh Shah, Investec)
- Answer: The primary-secondary TMT gap has narrowed to ~₹5,000, which is healthy and supports primary price upticks. The 11.5% safeguard duty is still in force (second year of three) and providing relief; the anti-dumping investigation is ongoing with measures likely. Definitive ADD on met coke has no impact on SAIL since captive coke capacity is equivalent to or surplus of requirement. (Dr. Ashok Panda)
Iron Ore & Sub-Grade Fines Monetization
- Question: What is the sub-grade fines inventory/auction plan, and can third-party ore sales momentum continue given logistics constraints? (Parthiv, Anand Rathi; Sumangal Nevatia, Kotak Mahindra)
- Answer: Sub-grade fines inventory on balance sheet is 32 million tonnes; 3 million tonnes have been put to auction as the FY27 opening move. Q1 ore sales were 1.1 million tonnes vs 0.31 million tonnes CPLY — revenue ₹574 crores vs ₹157 crores, EBITDA ~₹150 crores. Odisha sales more than doubled; Chhattisgarh auctions fructified in Q2; Jharkhand in progress. FY27 target is 8 million tonnes vs ~3.5 million tonnes in FY26. Logistics constraints remain but are being eased through road movement and better rake availability; demand for 56-60% Fe sub-grades is strong. (Dr. Ashok Panda)
CapEx & Expansion Ramp
- Question: What is the updated CapEx guidance for this year and next few years? (Pinakin Parekh, HSBC; Rajesh Ravi, HDFC Securities)
- Answer: FY27 CapEx target is ₹15,000 crores (Q1 spend ₹2,575 crores vs ₹2,306 crores plan); FY28 will exceed ₹20,000 crores, rising to ₹25,000-26,000 crores thereafter, increasing for the next 4-5 years as expansions progress. Volume guidance is unchanged — production will exceed last year in Q2 and Q4, delivering FY27 growth. (Dr. Ashok Panda)
Employee Cost & Pay Commission
- Question: What is the employee cost outlook, and will wage provision hit Q4 FY27? (Pinakin Parekh, HSBC; Ritesh Shah, Investec)
- Answer: Q1 employee cost was ₹2,937 crores vs ₹2,944 crores CPLY — flat despite VRS payouts, with headcount declining. Wage revision is due from January 1, 2027; the material group will evaluate provision possibilities in Q4 FY27, but no calculation is available yet. (Dr. Ashok Panda)
Coking Coal: Sourcing Mix & Captive Cost Advantage
- Question: What is the imported/indigenous coal breakup and the cost benefit of captive coal? (Pallav Agarwal, Antique Stock Broking)
- Answer: The blend is 85% imported / 15% indigenous — 62% imported hard coking coal, 23% imported soft coking coal, 15% indigenous. Q1 average cost was ₹13,100 for indigenous vs ₹21,200 for imported; own-captive coal is ~₹6,000 and will rise from December as Tasra mine ramps up, improving both cost and self-sufficiency. (Dr. Ashok Panda)
Deleveraging & Finance Cost
- Question: What is the current borrowing position and deleveraging trajectory? (Netra Deshpande, Mirae Asset Sharekhan)
- Answer: June-end borrowings were flat vs opening at ~₹21,700 crores despite inventory build, and have since reduced to ~₹21,400 crores. Debt-equity improved to 0.36x from 0.38-0.39x; cost of debt fell to 6.24% from ~6.8% YoY, saving ~₹100 crores in Q1 finance costs. (Dr. Ashok Panda)
Cost Efficiency Program
- Question: How much per-tonne cost savings can be expected by FY28-29? (Akhilesh Kumar, Emkay Global)
- Answer: In FY27, cost reduction of ₹2,000-3,000/tonne is targeted from current operations. By FY29, IISCO expansion is expected to cut variable cost by ₹3,000-4,000/tonne, partially offset by ₹1,500-2,000/tonne higher fixed cost — a net ~₹2,000/tonne benefit flowing to EBITDA. (Dr. Ashok Panda)
Rail Price Revision & Finished Steel Conversion
- Question: What is the rail price benchmark and downside risk, and what is the status of DSP semis conversion? (Vikash Singh, ICICI Securities)
- Answer: There is no fixed benchmark — rail pricing follows input costs and mill efficiency; Bhilai rail mills operate at efficiency better than global benchmarks. FY26 provisional price (₹74,000) was set when coal was low; final pricing is expected higher and no further P&L hit is expected. DSP produces >1 million tonnes of semis annually; a new 0.8-0.9 million tonne TMT bar mill is due September-December 2027, and conversion charges are at industry-best standards. (Dr. Ashok Panda)
Key Takeaway
SAIL delivered its best EBITDA margin since FY22 in Q1 FY27 — EBITDA up ~49% YoY to ₹4,356 crores (16.7% margin, ₹10,464/tonne) — driven by a ₹5,000/tonne QoQ NSR jump (₹57,100), treasury gains (cost of debt 6.24%) and more than tripled captive iron ore sales (1.1 million tonnes; ~₹150 crores profit), which offset design-led volume cuts from advanced capital repairs (production 4.8 million tonnes, sales 4.2 million tonnes) and imported coal at ₹21,300/tonne. Management maintained FY27 volume-growth and ₹15,000 crore CapEx guidance, targeting ₹2,000-3,000/tonne cost reduction, 8 million tonnes iron ore sales and 3 million tonnes sub-grade fines auction in FY27. Q2 NSR is guided lower by ₹1,000-2,000 QoQ on seasonality, with coal costs softening ₹1,200-1,500. Key watch points: Q4 FY27 wage-revision provisioning, geopolitical input-cost volatility, import pressure, and final rail-price settlement.