S A I L

SAIL reported strong financial and operational performance for Q4 FY26 and the full fiscal year. Q4 crude steel production grew 4% to 4.9 million tons, and sales volume increased 4% to 5.3 million tons, leading to a 5% rise in sales turnover to INR 30,541 crores. Annually, the company achieved its highest-ever sales volume of 19.9 million tons (up 11% YoY) and a sales turnover of INR 110,000 crores (up 8% YoY). Profitability saw significant improvement, with annual PAT growing 51% and PBT 44% YoY.

The company significantly strengthened its balance sheet in FY26, achieving a debt reduction of INR 8,150 crores for the year, including INR 3,200 crores in Q4 alone. This led to a decrease in the cost of borrowings from 7.3% to 6.2%. Management highlighted that the balance sheet for FY26 is 'totally clean from the qualifications' after a long time, with the net debt to equity ratio currently at 0.37, targeted for further reduction in FY27.

SAIL has ambitious capital expenditure plans to support future growth. After spending INR 9,100 crores in FY26, the company projects capex of INR 15,000 crores for FY27, rising to INR 18,000-19,000 crores in FY28, and INR 20,000-25,000 crores annually thereafter. These investments are primarily for expansion projects at IISCO (INR 36,000 crores for 4.5 MT capacity), Bhilai (INR 30,000 crores for 3.5 MT capacity), and Bokaro (INR 18,000 crores for 3 MT capacity), alongside AMR and debottlenecking initiatives.

The company is focused on enhancing operational efficiency and reducing costs. Efforts include improving blast furnace productivity by closing inefficient furnaces and ramping up larger ones, leading to a targeted coke rate reduction of 20 kg/ton in FY27. While coking coal prices increased in Q1 FY27, management expects the impact to be partially offset by better raw material usage, which contributed INR 429 crores in savings in Q4 FY26. The company is also addressing cost increases in fluxes and limestone.

SAIL is actively reducing its employee count, with a reduction of approximately 3,400 numbers in FY26 and a projected annual reduction of 3,400-3,500 for the next two years. This has already led to a decrease in employee remuneration by INR 200-300 crores in the P&L account. The upcoming pay commission revision, applicable from January 1, 2027, will be provisioned for in Q4 FY27, with guidelines from the government still awaited.

While the domestic market remains steady, management noted that demand is expected to be muted in Q1 and Q2 FY27 due to seasonal effects and destocking, before picking up from Q3 onwards. Global economic uncertainties, particularly from the Middle East geopolitical situation, continue to pose risks, with global GDP projections for 2026 being revised downwards. Despite these challenges, SAIL aims for a sales volume of 22 million tons (excluding RINL, NMDC, NSL) and crude steel production of 22.5 million tons in FY27.

Management outlined a plan to reduce losses and improve EBITDA at the Salem Steel Plant. Key initiatives include increasing the CR mill yield from 83-84% to 90%, replacing LPG with PNG, and utilizing cheaper power sources. The strategy also involves ramping up production by feeding stainless steel slabs from imported sources to leverage existing spare capacities in the CR and SR mills. The BISL unit remains on the disinvestment list, awaiting government comfort.