Prabhudas Lilladher has adjusted its target price for Steel Authority of India to ₹180 following a 67% rise in operating profit. While iron ore sales boosted recent earnings, high coking coal costs remain a primary challenge. Investors are now watching the January 2027 start of the Tasra coal mine to see if it can help reduce import dependence and stabilize profit margins.
Prabhudas Lilladher has updated its outlook on Steel Authority of India (SAIL), setting a new price target of ₹180. This revision follows the company’s latest financial report, which showed a 67% jump in operating profit (EBITDA) to ₹42.2 billion compared to the previous year. The company also saw a 10% increase in sales volumes, reaching 5.16 million tonnes, largely driven by the liquidation of existing inventory.
A significant factor in these results was the sale of iron ore fines. In the first half of the current fiscal year, this non-core activity contributed ₹3.88 billion to profits. While this has provided a cushion for recent earnings, the company continues to operate in a challenging environment due to high coking coal prices and volatility in steel product pricing. Because the steel industry relies heavily on coking coal, these price fluctuations can create pressure on profit margins.
Looking ahead, a key project for investors to monitor is the Tasra coking coal mine, which is scheduled for commissioning in January 2027. This project is strategically important because it aims to reduce the company's reliance on imported coal. If the project begins on time and reaches expected production levels, it could help insulate the company from global coal price swings and improve cost efficiency over the long term.
Analysts have updated their projections to account for higher spending on expansion projects and revised pricing assumptions for steel and coal. The stock currently trades at an enterprise value of roughly 5x to 5.3x its expected operating profit for fiscal years 2028 and 2029. Future investor interest will likely focus on the actual commissioning date of the Tasra mine and any sustained recovery in steel prices, which would be necessary to support the company’s profit margins in the second half of the fiscal year.