Steel Authority of India Ltd was formed in 1973 with an authorised capital of Rs 2,000 crore to manage the five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and Burnpur. The company has been instrumental in laying a sound infrastructure for the industrial development of the country, thereby triggering economic growth by providing inputs for the consuming industry. Today, Steel Authority of India Ltd is one of the seven Maharatnas, and the largest steel making company in the country. It is also the second largest iron ore producer with the second largest mines network, with Government of India owning a 75% stake in the company. SAIL manufactures a broad range of steel products such as railway products (rails, wheels, axles, etc), structurals (beams, channels, angles, etc), bars and rods, hot rolled, cold rolled and galvanised products. The company has five integrated steel plants, three special steel plants and 1 ferro-alloy plant, mainly in the eastern and central regions of India. Its diversified product mix is supported by a strong marketing and distribution network including dealers, branch sales offices, customer contact offices, departmental warehouses and consignment agencies. The Indian steel giant has an equity capital of Rs 4,130.53 crore, supported by huge reserves of Rs 32,816.12 crore, which is almost eight times its equity. The steel industry overview is quite bright going forward, with the country expected to overtake Japan to become the world’s second largest steel producer. It aims to achieve 300 MMT of annual steel production by 2025-2030 and the new steel policy approved by the Union Cabinet in May 2017 is expected to boost India’s steel production to new heights. Further, the country’s comparatively low per capita steel consumption and the expected rise in consumption on the back of increased infrastructure/construction activities and thriving automobile and railways sectors offers huge scope for the steel industry over the next decade. The recent financial results have been good for the company, with Steel Authority of India posting its highest EBITDA per tonne in Q4FY18, with its OPM and NPM improving significantly during the last quarter. The steel industry expects better realisation from higher steel demand from China, continuing supply limits and falling inventories. The company’s management is targeting a 28% volume growth for FY2019 on the back of capacity expansion from 12.5 MT to 20 MT almost complete. Based on improving fundamentals, expansion initiatives and bright industry prospects, the Steel Authority of India stock currently quoting at Rs 83 can cross the Rs 100-mark in the next six months.

Following a recovery in global stocks, the domestic equity markets halted its two-day decline, with the BSE Sensex rising 385 points to close at 35,423. The escalating US China trade war has been creating a negative sentiment across the globe and is a major worry for Indian traders. First quarter results will start to come out soon and data reports suggest that traders are less confident as they have “carried” less positions formed in June F&O series over to the July series. This indicates that any fresh open interest build up from the current levels will dictate a further move in the Index in the next 10 days.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

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