Morgan Stanley analyst Rahul Gupta CFA maintained a Sell rating on Steel Authority of India Limited yesterday and set a price target of INR105.00.
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Rahul Gupta CFA’s rating is based on several key observations regarding Steel Authority of India Limited’s financial performance and market conditions. The company reported an increase in finished steel inventory, which rose from 1.4 million tons in the previous quarter to 1.7 million tons. This indicates potential challenges in demand absorption, which could pressure future pricing and profitability.
Additionally, while blended realizations saw a slight increase, management anticipates a decrease in realizations in the upcoming quarter, suggesting potential revenue pressure. The company’s earnings were also negatively impacted by stock valuation adjustments due to coking coal cost revaluation, amounting to Rs9.5 billion. Furthermore, the planned increase in capital expenditure from Rs60 billion in the previous fiscal year to Rs75 billion in the current year could strain financial resources, especially if revenue pressures persist.
According to TipRanks, Gupta CFA is an analyst with an average return of -2.4% and a 50.00% success rate. Gupta CFA covers the Basic Materials sector, focusing on stocks such as Steel Authority of India Limited, ACC Limited, and Ambuja Cements Limited.