# 1. Financial Performance ## A. Key Figures * **Revenue:** **₹18,500 Cr** (Q4) * Profit Before Tax: ₹890 Cr (Q1) (+2.7x YoY) · ₹326 Cr (Q1 prior year, before exceptional items) * **EBITDA per Ton:** **₹6,400** (Q1) · **₹6,000** (Q1 prior year) * **Borrowings:** **₹28,741 Cr** (as of 30-Jun-25) down from **₹29,811 Cr** (31-Mar-25) ## B. Revenue & NSR Trends * **NSR Improvement:** Blended net selling realization increased sequentially by **₹1,600 per ton**, reflecting favorable pricing dynamics despite headwinds from iron ore royalty and stock valuation adjustments. * **Rail Price Impact:** Full benefit of **₹173 Cr** rail price revision realized in FY '23–'24; no further benefit expected in current year, with provisional rail pricing lowered to **₹74,000 per ton** for FY '25–'26. * **NMDC Transaction Accounting:** NMDC-related revenue and cost recognized symmetrically as stock in trade, with **slightly positive EBITDA contribution** expected under marketing arrangement. ## C. EBITDA & Profitability * **Sharp Profit Leverage:** Despite only **8% turnover growth** due to lower steel prices, PBT surged over 7x YoY, driven by operational efficiency and cost management. * **EBITDA Bridge Complexity:** While NSR improved, EBITDA analysis shows a reported negative price impact due to **₹950 Cr one-time stock valuation drag**, partially offset by **₹650–700 Cr gain from higher sales prices**. * **Cost Headwinds:** Higher iron ore royalty costs and transitional production cost declines into inventory created temporary pressure on net realization and margin reporting. ## D. Balance Sheet & Debt * **Deleveraging Momentum:** Successful reduction of borrowings by **₹1,100 Cr** in Q1 underscores continued focus on balance sheet strength and cash flow discipline. --- # 2. Volume & Sales Performance ## A. Key Figures * Sales Volume: 4.55 Mn tons Q1 FY25–26 (+15%) · includes 0.37 Mn tons from NMDC * Saleable Steel Production: 4.7 million tons Q1 FY25–26 (+12%) * Total Steel Inventory: 3 Mn tons (1.7 Mn finished + 1.3 Mn in-process) ## B. Sales Volume Growth * **Record Start to Fiscal Year:** Best-ever Q1 sales volume driven by strong market demand and expanded contribution from NMDC. ## C. Production Output * **Production Growth & Seasonality:** Saleable output rose solidly, with peak volumes and efficiency typically realized in Q4 due to absence of maintenance shutdowns. ## D. Inventory Levels * **Inventory Positioning:** Elevated finished goods stock reflects strategic holding at 30 crore tons, while coking coal reserves are maintained at **25–30 days** at ports and **~5 days** at plants—within target range. * **Quarterly Inventory Trend:** Notable shift in inventory composition from March to June quarter, with drawdown in finished goods and overall inventory normalization. --- # 3. Cost & Input Trends ## A. Key Figures * **Coking Coal Cost:** **₹16,918/ton** Q1 FY26 (↓₹600–700 QoQ) · **↓~₹6,000/ton** YoY * **Stock Valuation Impact:** **₹1,050 Cr** one-time adverse impact in Q1 (vs. ₹950 Cr adverse in Q4) * **Imported Coking Coal Cost:** **₹17,600/ton** Q1 (vs. ₹18,500/ton in Q4) * **Royalty Impact:** **₹173 Cr** higher iron ore royalty vs. Q4 ## B. Coking Coal Costs * **Sustained Cost Relief:** Significant year-on-year and sequential decline in coking coal costs underpins lower production costs, with imported coal showing marked improvement. * **Stable Outlook:** Coking coal prices expected to remain **largely flat in Q2**, supporting cost stability despite minor volatility. * **Efficiency Gains:** Operational improvements—including lower coal-to-hot metal ratio, reduced coke rates, and higher CDI—amplify cost advantages beyond input price declines. * **Input Dominance:** Coking coal remains the primary cost driver, with **imported coal having a disproportionately large impact** on overall cost structure. ## C. Royalty & Other Expenses * **Royalty Pressure:** Higher iron ore royalties driven by **IBM price linkages** explain the rise in other expenses, with potential for continued volatility. * **Volume-Insensitive Costs:** Other expenses remained elevated despite lower output, reflecting **fixed cost drag from planned shutdowns and capital repairs**. * **Production Disruptions:** Planned maintenance in Q1 impaired technical parameters, increasing unit costs and negatively affecting raw material efficiency metrics. ## D. Stock Valuation Impact * **One-Time Drag:** Q1 EBITDA burdened by a **₹1,050 Cr non-recurring stock valuation adjustment**, primarily due to lower production costs from falling coal prices. * **Favorable Reversal Likely:** Absence of this impact in Q2 to provide a **mechanical boost to EBITDA**, assuming stable inventory levels. * **Valuation Resilience:** Current inventory carried at low Q1 cost levels reduces risk of further markdowns; **future coal price increases could trigger positive revaluation**. --- # 4. Capacity & Capex ## A. Key Figures * **Capex:** **₹6,000 Cr** prior year · **₹7,500 Cr** current year guidance (approved) * **IISCO Capex:** **₹36,000 Cr** estimated total (3–4 year outlay) * **Capacity Addition:** **4.5 Mn T** new + **0.5 Mn T** debottlenecked at IISCO ## B. Expansion Projects * **IISCO Scale-Up Confirmed:** Expansion to add **45 crore tons** of crude steel capacity via greenfield investment and operational optimization, with tendering active. * **Project Timeline Set:** IISCO capex to commence next fiscal, following order finalization; execution window spans **36 months post-order**. ## C. Capex Allocation * **Government-Led Growth Push:** National capex agenda prioritized to drive infrastructure development and long-term industrial expansion. * **Funding Confidence:** Full-year capex target of ₹7,500 Cr on track, fully board-approved and aligned with strategic capacity buildout. ## D. Tendering Progress * **Procurement on Schedule:** Tendering for IISCO expansion underway since last quarter, with order placements anticipated between **2025 and 2026**. --- # 5. Product & Segment Mix ## A. Key Figures * **Long Products NSR:** **₹54,500/ton** Q1 · **₹53,300/ton** Q4 * **Flat Products NSR:** **₹50,400/ton** Q1 · **₹47,300/ton** Q4 * **NMDC Steel Revenue:** **₹1,800 Cr** (~4 lakh tons) ## B. Long vs Flat NSR * **Pricing Momentum:** Both long and flat product realizations showed strong sequential improvement, reflecting favorable market pricing dynamics. * **Flat Products Outperformance:** Flat product NSR saw particularly robust growth quarter-on-quarter, indicating strong demand recovery in key end markets. ## C. NMDC Steel Contribution * **Breakeven Plus Performance:** NMDC Steel achieved breakeven with a positive margin, marking an inflection in operational profitability. * **Meaningful Revenue Contribution:** Steel sales volume of **4 lakh tons** contributed significantly to consolidated revenue, enhancing scale and integration benefits. --- # 6. Demand & Pricing Risks ## A. Key Figures * Global GDP Growth: 2.4% (2025) down from 2.9% (2024) * Global Inflation: 4.1%–4.2% projected for 2025 * Global Steel Demand Growth: 1.7% in 2025 (WSA) * **Steel Imports:** **Over 24% surge** in 2025, primarily from China, Vietnam, Japan ## B. Import Competition * **Trade Tensions Escalate:** Rising protectionism and trade disputes—especially U.S. tariffs on China and Europe—are amplifying global market volatility. * **Import Surge Pressures Domestic Prices:** Sharp rise in steel imports in 2025 triggered defensive trade actions in India, U.S., and UAE, though Q1 flows have stabilized. ## C. Global Oversupply * **China Drives Global Glut:** Over **50%** of global steel output comes from China, where a deepening real estate crisis and weak domestic demand are fueling export dumping. * **Diverging Regional Demand:** Advanced economies face stagnant steel consumption due to high rates and soft construction, while **India, Southeast Asia, and Africa** are growth engines via infrastructure and urbanization. * **Emissions Progress:** CO2 output improved year-on-year, with continued focus on **zero liquid discharge** and environmental restoration. --- # 7. Guidance & Outlook ## A. Key Figures * Sales Volume Guidance: 18.5 million tons FY26 (SAIL only, ex-NMDC) * **NSR Guidance (July):** **₹50,000/ton** expected average · **₹51,500/ton** long products · **₹48,600/ton** flat products * **Railway Pricing:** **₹74,000/ton** provisional (subject to govt approval) ## B. Volume Targets * **Focused Growth Trajectory:** Full-year volume target of 85 crore tons reflects confidence in domestic demand, excluding NMDC steel due to ramp-up uncertainty. * **Robust Macro Backdrop:** Indian economy poised as fastest-growing major economy (3–7% GDP growth), with steel demand expected to expand **over 8%**, driven by infrastructure and urbanization. * **Sectoral Momentum:** Residential (affordable housing), capital goods (infrastructure, renewables), and consumer sectors (auto, durables) to sustain healthy steel consumption growth. ## C. NSR Expectations * **Near-Term Price Pressure:** NSRs expected to decline in Q2 due to seasonal weakness, with July realizations down and average NSR projected at **₹50,000/ton**. * **Recovery Anticipated:** Steel prices have stabilized recently, with management expecting improvement in traditionally strong upcoming quarters. * **Key Financial Variables:** Next quarter faces headwinds from lapping **₹950 Cr stock revaluation** and **₹250 Cr excess royalty** benefits, alongside lower realizations. ## D. Strategic Outlook * **Operational Focus:** Company prioritizing efficiency gains and remains optimistic on favorable market dynamics supporting future performance.