SAIL Shares Jump 3% Despite 66% Profit Drop in Q3FY25 – What’s Driving the Rally?
SAIL shares rose 3.5% despite a 66% YoY drop in Q3FY25 net profit to ₹141.89 crore due to higher expenses. Revenue grew 5% YoY to ₹24,490 crore, while EBITDA margins contracted to 8.3%. Analysts cite demand resilience but caution on margin pressures, with technical levels suggesting a potential breakout above ₹105.
CONTENTS:
- SAIL Stock Rises 3.5% Despite 66% Profit Decline in Q3FY25: Should You Buy?
- SAIL Shares Climb 3% Despite Q3 Profit Slump of 66% Due to Rising Expenses
SAIL Shares Jump 3% Despite 66% Profit Drop in Q3FY25 – What’s Driving the Rally?
SAIL Stock Rises 3.5% Despite 66% Profit Decline in Q3FY25: Should You Buy?
Steel Authority of India Ltd (SAIL) saw its stock rise 3.5% on February 12 following the release of its Q3FY25 earnings, despite reporting a 66% drop in net profit due to higher costs and pricing pressures.
Q3FY25 Performance Overview
SAIL posted a consolidated net profit of ₹141.89 crore, a sharp decline from ₹422.92 crore in Q3FY24. On a sequential basis, net profit plummeted 84% from ₹897 crore in Q2FY25. However, revenue from operations grew 5% year-on-year to ₹24,490 crore, though it dipped 0.75% quarter-on-quarter from ₹24,675 crore in Q2FY25.
At the operational level, EBITDA fell 5.3% YoY to ₹2,029.6 crore, with the EBITDA margin contracting to 8.3% from 9.2% in Q3FY24, reflecting increased input costs.
Management Commentary
SAIL Chairman Amarendu Prakash acknowledged the impact of declining steel prices and rising imports but expressed confidence in the company’s ability to navigate these challenges. He emphasized efforts to boost production, improve cost efficiency, and explore greener technologies, while expecting government interventions to address the issue of cheap imports.
Analyst Insights
Analysts noted that despite the profit slump, steady revenue growth indicates resilience in demand. However, margin pressures remain a key concern. Investors will be closely watching cost-control measures and steel price trends to assess SAIL’s near-term prospects.
Technical View & Stock Performance
Technical analysts suggest that SAIL’s stock sustaining above ₹100 is a positive sign for an uptrend. A breakout above ₹104–₹105 could push it towards ₹115, with a recommended stop loss at ₹98.
Following the earnings release, SAIL’s stock touched ₹103.65 but remains 41% below its 52-week high of ₹175.65 from May 2024. It has also recovered 4% from its 52-week low of ₹99.55 in January 2025. Despite recent gains, the stock has declined over 18% in the past year and has been under selling pressure for three consecutive months.
Should You Buy? SAIL Shares Jump 3% Despite 66% Profit Drop in Q3FY25
Given the current market conditions, investors may consider holding SAIL while monitoring steel price trends and cost-control efforts. New investors could look for a breakout above ₹105 before entering for a short-term target of ₹115, maintaining a stop loss at ₹98.
SAIL Shares Climb 3% Despite Q3 Profit Slump of 66% Due to Rising Expenses
Shares of Steel Authority of India Ltd (SAIL) surged 3.44% to ₹103.60 in early trade on February 12, despite the company reporting a sharp 66% decline in consolidated net profit for Q3FY25.
Q3FY25 Financial Performance
- Net Profit: ₹141.89 crore, down 66% from ₹422.92 crore in Q3FY24, mainly due to increased expenses.
- Total Income: ₹24,723.43 crore, up from ₹23,492.33 crore in the year-ago quarter.
- Total Expenses: ₹24,560.47 crore, rising from ₹23,140.81 crore in Q3FY24.
Management Commentary
SAIL Chairman Amarendu Prakash acknowledged the challenging market conditions, including falling steel prices and increased cheap imports. However, he expressed confidence that government interventions would help address these issues. He also highlighted that SAIL had achieved higher EBITDA in Q3FY25 compared to the same quarter last year.
“We anticipate that government initiatives, particularly in infrastructure development, will boost domestic steel demand,” Prakash stated.
Key Developments
- Manish Gupta was appointed Director of Technical Projects and Raw Materials at SAIL in January 2025.
- Gupta, a mechanical engineering graduate from MANIT Bhopal, began his career at SAIL as a management trainee in 1991 at the Durgapur Steel Plant.
Recent Performance & Outlook
- In Q2FY25, SAIL had reported a 31% drop in consolidated net profit to ₹897.15 crore, down from ₹1,305.59 crore in Q2FY24.
- Total income in Q2FY25 stood at ₹24,842.18 crore, lower than ₹29,858.19 crore in the previous year.
Despite continued margin pressures, analysts remain optimistic about demand resilience, particularly with anticipated policy support from the government.