India: SAIL posts record crude steel output of 4.7 mnt in Q3FY'23

PSU steel major SAIL has posted best-ever crude steel output of 4.7 million tonnes (mnt) for the quarter ended 31 December, 2022. The company aims to achieve sales of 4.8 mnt in Q4FY'23, SteelMint learnt at SAIL's quarterly earnings call held on 15 February.

This financial year has been quite volatile as coking coal prices reached their peak in Q1, while Q2 saw a sharp decline in steel prices on global cues. Meanwhile, domestic demand has been steady which has resulted in an upward swing in prices and gradual moderation in coking coal prices.

Steel demand projection is positive with India's crude steel production growing 5% y-o-y to 92.5 mnt and finished steel consumption increasing 12% y-o-y to 85.9 mnt in April-December 2022, as per Joint Plant Committee (JPC) data.

Highlights:

• Crude steel production up q-o-q: The company has recorded its best-ever crude steel production of 4.7 mnt in Q3FY'23, up 9% from 4.3 mnt in the last quarter. Similarly, output rose 4% y-o-y as against 4.5 mnt in the same period last year. During April-December 2022 (9MFY'23), crude steel output totalled 13.33 mnt, up 4% from 12.77 mnt in corresponding period last year.
  
  
• Steel sales stable q-o-q: Steel sales remained largely stable q-o-q at 4.2 mnt in Q3. However, sales witnessed an 11% growth y-o-y as against 3.8 mnt in Q3FY'22. During 9MFY'23, sales were recorded at 11.51 mnt against 11.44 mnt in same period last year. During the period, export volumes fell by 830,000 t.
  
  
• EBITDA surges q-o-q: The company's Earnings Before Interests, Taxes, Depreciation and Amortization (EBITDA) stood at INR 2,198 crore in Q3, registering a whooping rise of 87% compared with INR 1,174 crore seen in the quarter-ago period.
  
  
• PAT up q-o-q: SAIL has posted positive Profit After Tax (PAT) of INR 464 crore during the quarter against negative PAT of INR 386 crore last quarter. Lower costs during the quarter helped to achieve a positive PAT.
  
  
• Update on wagon wheel: The steel major has participated in a tender which was floated by the Indian Railways. Currently, the company is able to supply 40,000 wheels per year and shall enhance this with further modifications in its plants.
  
  
• Update on rails prices: The price revision of rails has been received till 2021 and prices for 2021-2022 have been submitted. It is expected that this will benefit the company in this financial year.
  
  
• Net sales realisations (NSR): The average realisations remained higher during April-December 2022 against CPLY coupled with higher sales volumes. Furthermore, this helped the company achieve 3.6% growth in its revenue from operations to INR 75,317 crore from INR 72,715 crore in the same period last year. During the last quarter, prices of long steel were at around INR 54,500/t and that of flat steel at around INR 54,000-54,500/t.
  Meanwhile, steel prices have shown an improvement in January, with NSR for long steel being in the range of INR 56,000/t and for flat steel at INR 54,000/t.
  
  
• Capex: The capex commitment for the financial year is around INR 5,500 crore out of which INR 3,500 crore have been spent. Furthermore, the company's capex plan for FY'24 is around INR 6,500-7,000 crore.
  
  
• Inventory: SAIL targets to bring down inventories to less than 1 mnt by the end of this financial year.
  
  
• Capacity expansion: The company has plans to expand its capacity by another 3 mnt in the next three-four years. In the meantime, new expansion at IISCO steel plant would be started and other expansions shall take place subsequently. Furthermore, the steel major eyes 12-13 mnt expansion by 2030-2031.
  
  
• Coking coal costs: Coking coal carrying costs were in range of INR 25,500/t during Q3FY'23.
  
  
• Reduction in semis component: The company's semis component has been coming down as there are two new mills namely the Universal Section Mill (USM) at IISCO Burnpur and Medium Structural Mill (MSM) at Durgapur. The MSM has started receiving orders to the extent of 50,000 t per month. Also, the USM has picked up to 35,000 t from levels of 15,000-20,000 t last year. The semis component will further reduce with the stabilisation of the USM. In addition, the company expects its hot-strip mill to ramp up and provide higher NSR.