Steel Authority of India Limited (SAIL) reported a stellar Q2 FY27 with PAT soaring to Rs 1,774 crore. The company posted a 20% growth in sales turnover while aggressively reducing debt. Investors are closely watching the newly announced Rs 1.2 lakh crore expansion plan aimed at boosting capacity to 35 MTPA by FY31.
SAIL Q2 Performance: Profit Soars as Expansion Plans Take Center Stage
Profit After Tax (PAT) reached Rs 1,774 crore in Q2 FY27, compared to Rs 427 crore in the same period last year. Total sales turnover climbed 20% to Rs 31,766 crore, supported by robust volume growth in both production and sales.
Reader Takeaway: Strong operational growth and debt reduction drive profitability, while a massive Rs 1.2 lakh crore capex plan introduces potential future equity dilution risks.
What just happened
Steel Authority of India (SAIL) delivered a strong financial performance for the quarter ended September 2026. The company reported a 4% increase in crude steel production to 4.85 million tons and a 5% jump in sales volume to 5.2 million tons. Beyond the topline growth, the firm focused on balance sheet health, reducing debt by Rs 1,146 crore, leading to a improved debt-equity ratio of 0.34x.
Why this matters
The company’s announcement of a Rs 1.2 lakh crore capital expenditure (capex) plan between FY27 and FY31 signals a significant shift toward scaling operations. The goal is to ramp up capacity from the current 20 million tons per annum (MTPA) to 35 MTPA. This massive outlay, spanning facilities in IISCO, Bokaro, Bhilai, and Rourkela, is designed to capture growing industrial demand.
Risks to watch
While operational numbers are healthy, the massive capex budget brings risks. Management acknowledged that funding will be a mix of internal accruals and debt, but explicitly kept the door open for a Follow-on Public Offer (FPO) to finance the expansion. This potential equity dilution remains a key overhang for existing shareholders. Additionally, volatility in imported coking coal prices continues to be a margin sensitivity point, though the upcoming commissioning of the Tasra mine in Q4 is expected to provide some cost relief.
Operational highlights
Despite challenges like heavy rainfall in Jharkhand and Odisha that hampered blast furnace productivity in Q2, the company managed to maintain sales momentum. Efforts to optimize the product mix towards higher-end steel are ongoing, and the company is steadily streamlining its workforce, aiming for 26,000 employees by 2031.