31 January 2021
3QFY21 Results Update | Sector: Metals
SAIL
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
SAIL IN
4,130
237.9 / 3.2
80 / 20
-8/41/9
1735
25.0
CMP: INR58
TP: INR81 (+41%)
Upgrade to Buy
Biggest beneficiary of improved pricing
Strong deleveraging to add to equity value; upgrade to Buy
Financials & Valuations (INR b)
Y/E MARCH
2021E 2022E 2023E
Sales
EBITDA
Adj. PAT
EBITDA Margin (%)
Cons. Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
Ratios
Net D:E
RoE (%)
RoCE (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA(x)
FCF Yield (%)
4.3
0.5
4.9
5.0
0.5
5.1
6.2
0.4
5.3
0.9
12.3
10.7
0.8
9.8
9.4
681.8 734.7 764.1
128.8 118.1 106.0
53.2
18.9
12.9
NA
46.4
16.1
11.2
37.0
13.9
9.0
SAIL’s result highlights strong gains from higher steel prices in the business
model – 3QFY21 EBITDA was up 147% YoY to INR50.8b, the highest ever.
Net debt also fell sharply by 12% QoQ to INR443.0b.
Spot steel prices are ~INR7,000/t, above the 3QFY21 average, which should
drive 24% QoQ growth in EBITDA in 4QFY21, even after factoring in wage
revisions. We raise FY21E EBITDA by 13%, factoring in strong near-term
pricing.
Even after factoring in conservative pricing in FY22E (~INR10,000/t decline
from spot), we estimate a further INR71b (INR17/sh) fall in net debt to
INR372b (3.2x of EBITDA) by Mar’22. Therefore, we upgrade to
Buy.
The
valuation is also attractive at 5.2x FY22e EV/EBITDA and 0.5x P/B.
Strong realization drives beat on EBITDA
-12.9 -20.1
0.6
7.3
7.9
109.1 118.9 126.4
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Dec-20 Sep-20 Dec-19
75.0
75.0
75.0
13.0
13.7
14.8
4.2
7.9
3.2
8.1
3.6
6.7
Sales / EBITDA / adj. PAT at INR198b/50.8b/25.7b came in at
+17%/+167%/+929% QoQ and -3%/+14%/+29% v/s our estimate.
Sales volume was weaker at 4.15mt (est. 4.4mt) due to lower exports.
Blended realization surprised positively, rising by INR7,576/t QoQ to
INR47,813/t (est. INR46,237/t). This was owing to higher steel prices and
contribution from iron ore sales (benefit of ~INR790/t). As a result,
EBITDA/t also rose by INR7,722/t QoQ to INR12,241/t (22% above
estimate).
Finance cost fell 21% YoY to INR6.7b on lower debt and interest rate.
In this quarter, SAIL has also moved to the new tax regime and has written
off deferred tax assets of INR12.9b. While reported PAT was INR12.8b,
adjusted PAT was thus higher at INR25.7b (10x of 2QFY21).
Interim dividend of INR1.0/sh (INR4.1b outflow) was also announced.
9MFY21 revenue/EBITDA stood at INR458b/INR65.7b, +1%/+76% YoY on
higher EBITDA/t of INR6,208/t (+74% YoY). Adj PAT stood at INR15.5b v/s
loss of INR7.0b in 9MFY20.
FII Includes depository receipts
Conference call takeaways – NSR at INR7,000/t, above 3QFY21 average
While primary rebar prices are expected to correct due to increased supply
from secondary steel mills at lower prices, flat product (HRC) prices are
expected to remain strong. Jan’21 NSR was ~INR7,000/t, above 3QFY21.
Revisions in employee wages would be done retrospectively from Apr’20,
and provisions for the same would be made in 4QFY21. The impact of the
wage revisions has been guided at >10% of employee cost (INR87.1b in
FY20).
Debt reduced by a further INR14b in Jan’21, and net debt is guided to fall
below INR400b by Mar’21.
Amit Murarka - Research analyst
(Amit.Murarka@motilaloswal.com)
Basant Joshi - Research analyst
(Basant.Joshi@motilaloswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
 Motilal Oswal Financial Services
SAIL
Valuation and view
While employee cost is expected to rise by >10% on account of wage revisions,
we expect the impact to be absorbed by volume growth and higher realization
in the near term.
Despite factoring in conservative realization (~15% discount to spot) and higher
coking coal prices (USD170/t CNF India) in FY22E, we estimate SAIL’s EBITDA to
grow at a 44% CAGR to INR118b over FY20–22E.
We estimate net debt reduction of INR162b (INR39/sh) to INR372b (INR90/sh)
over FY20–22E – on the back of higher operating cash flows. Realization of
Railways debtors would lead to further deleveraging (not factored in). With
significant debt reduction and higher earnings, net debt/EBITDA should decline
to ~3.0x by Mar’22.
We value the stock at 6.0x FY22E EV/EBITDA at INR81/sh, implying target P/B of
0.7x (in line with the historical average). Upgrade to Buy.
FY21E
2Q
3Q
4QE
4.2
4.1
4.2
33.6
1.4
12.0
40,237 47,813 53,313
-10.3
18.2
23.4
169.2 198.3
223.6
19.8
19.9
38.2
19,483 29,694 36,267
19.0
50.8
62.9
4,518 12,241 15,006
7.2
6.7
6.4
9.9
9.8
9.9
2.0
2.2
2.2
3.9
36.4
48.8
2.2
0.0
6.1
36.4
48.8
2.2
23.6
12.6
35.6
64.8
25.8
3.9
12.8
36.2
2.5
25.7
36.2
Na
Na 1,143.1
FY20
14.2
0.8
43,328
-8.7
616.6
-7.9
23,538
56.9
4,000
34.9
37.6
9.9
-5.6
37.3
31.7
11.5
36.2
20.2
-4.1
Na
FY21
14.8
3.9
46,116
6.4
681.8
10.6
27,574
128.7
8,704
29.2
39.3
9.1
69.3
2.2
71.5
31.2
43.7
40.3
51.7
Na
FY21E
3QE
4.4
8.0
46,237
14.3
204.2
23.5
28,570
44.4
10,055
8.5
10.1
1.9
27.7
27.7
7.8
28.0
20.0
20.0
vs Est
(%)
-6
3
-3
14
22
Quarterly Performance (Standalone) – INR b
Y/E March
Sales (m tons)
Change (YoY %)
Realization (INR per ton)
Change (YoY %)
Net Sales
Change (%)
NSR to RM Spread (INR/t)
EBITDA
EBITDA per ton (INR)
Interest
Depreciation
Other Income
PBT (before EO Inc.)
EO Income(exp)
PBT (after EO Inc.)
Total Tax
% Tax
Reported PAT
Adjusted PAT
Change (YoY %)
1Q
3.2
-0.7
45,614
-6.2
148.2
-6.8
24,841
15.8
4,869
7.9
8.7
1.8
1.0
1.0
0.4
33.8
0.7
0.7
-90.5
FY20
2Q
3Q
3.1
4.1
-9.4
26.4
44,878 40,443
-6.7
-17.3
141.3
165.4
-15.5
4.5
24,712 18,495
11.6
10.0
3,684
2,439
9.4
8.5
9.0
9.3
1.6
1.9
-5.2
-5.9
-5.2
-1.8
34.5
-3.4
-3.4
-159.5
-5.9
-1.6
27.4
-4.3
-4.3
-168.0
4Q
3.7
-9.4
43,194
-3.6
161.7
-12.6
26,930
19.5
5,218
9.1
10.6
4.6
4.5
37.3
41.8
14.6
34.8
27.3
2.9
-42.2
1Q
2.2
-31.1
40,534
-11.1
90.7
-38.8
22,562
-4.0
-1,801
8.9
9.7
2.8
-19.8
-19.8
-7.1
36.0
-12.7
-12.7
Na
31
32
-36
29
Quarterly per ton trend
Avg. Rev. (INR/ton)
Costs per ton of sales (INR)
Inc(-)/Dec in stock & captive cons.
Consumption of Raw Materials
Staff cost
Others
Gross Margins per ton of sales
Conversion cost per ton of sales
EBITDA per ton of sales
1QFY20
45,614
-4,243
25,016
6,298
13,675
24,841
19,972
4,869
2QFY20
43,515
-3,285
23,451
6,223
14,805
23,349
21,028
3,684
3QFY20
40,443
4,742
17,206
4,950
11,106
18,495
16,056
2,439
4QFY20
43,194
-1,540
17,804
7,350
14,362
26,930
21,712
5,218
1QFY21
40,534
-1,518
19,490
8,909
15,453
22,562
24,362
-1,801
2QFY21
40,237
7,029
13,725
4,847
10,117
19,483
14,964
4,518
3QFY21 QoQ (%) YoY (%)
47,813
19
18
0
0
2,433
-65
-49
15,686
14
-9
5,650
17
14
11,804
17
6
29,694
52
61
17,454
17
9
12,241
171
402
31 January 2021
2
 Motilal Oswal Financial Services
SAIL
Conference call highlights
In 3QFY21, SAIL sold 4.12mt of steel, of which exports stood at ~0.24mt. Crude
steel production rose 14% QoQ to 4.37mt in 3Q.
During the quarter, it sold 1.27mt of iron for INR4.76b, implying realization of
INR3,750/t of iron ore. This contributed ~INR1,155/t to steel realization. We
estimate EBITDA of INR3.5b from iron ore sales.
NSR for flats stood at ~INR43,042/t and longs NSR stood at INR39,360/t.
However, Jan’21 NSR stood at INR46,000/t for longs and INR50,574/t for flats.
The management informed that real demand for steel remains strong; however,
sluggishness was observed in the latter half of the month. The management
hinted rebar prices may correct in the coming months due to the widened gap
(INR9,000/t v/s avg of INR4,000/t) between primary and secondary rebar prices.
However, it does not expect secondary rebar prices to correct further
downwards. On the other hand, the management expects flat product prices to
remain strong and does not foresee any impact on flat steel prices.
Guidance
SAIL had INR24b capex in 9MFY21. While the original guidance stands at INR40b,
the company has revised up its capex spending target to INR48b, in line with the
government directive to increase capex spending. However, the management
hinted that capex spending should be lower than INR40b. Similarly, the FY22
capex guidance has been doubled to INR80b from INR40b earlier. We expect
capex spending to remain at INR40–50b in FY22.
The management expects to sustain its current quarterly run-rate of 4.2mt sales
volume, and expects to achieve sales volume of 17.0mt in FY22.
The management informed that the revisions in employee wages would be
finalized in 4QFY21 and provided retrospectively from Apr’20. It expects the
impact of the revisions to be higher by >10% over FY20 staff cost (of INR87.1b).
SAIL expects to liquidate 2.0mt of iron ore inventory in 4QFY21.
The management informed that it normally carries coking coal inventory of 45
days. The impact of the recent spike in coking coal prices should reflect in
Apr’21. However, it expects coking coal prices to cool down from current levels.
Liquidity and debt position
SAIL’s receivables from the Railways remain elevated near 2QFY21 levels
(INR60b in 2QFY21). The management does not expect significant realization of
the same in 4QFY21 due to budgetary constraints on the Railways side.
SAIL’s net debt declined INR61b QoQ to INR443.1b at 3QFY21-end. It further
reduced by ~INR14.0b in Jan’21 and is expected to decline to ~INR400b by FY21-
end.
Valuation and view
Volume growth to take care of higher fixed cost:
While employee cost is
expected to rise by >10% on account of wage revisions, we expect the impact to
be absorbed by volume growth and higher realization. We have factored in a
~13% hike in staff cost over FY20.
31 January 2021
3
 Motilal Oswal Financial Services
SAIL
44% EBITDA CAGR over FY20–22E, even on conservative estimate:
Despite
factoring in conservative realization (~15% discount to spot) and higher coking
coal prices (USD170/t CNF India) in FY22E, we estimate SAIL’s EBITDA to grow at
a 44% CAGR to INR118b over FY20–22E.
Net leverage to remain comfortable:
We estimate a net debt reduction of
INR162b (INR39/sh) to INR372b (INR90/sh) over FY20–22E on the back of higher
operating cash flows. Realization of Railways debtors would lead to further
deleveraging (not factored in). With significant debt reduction and higher
earnings, net debt/EBITDA should decline to ~3.0x by Mar’22.
Exhibit 1: SAIL EBITDA back at FY08 levels; interest coverage ratios and net leverage seen improving
SAIL
EBITDA
Net-debt
Net-debt to EBITDA (x)
Interest paid
Interest coverage ratio (x)
RoE (%)
FY08
125.9
-100.5
-0.80
3.4
55.7
41.7
FY09
86.8
-98.2
-1.13
2.8
43.1
24.2
FY12
64.0
107.0
1.67
7.2
10.3
9.7
FY15
49.0
279.7
5.71
15.0
3.8
4.9
FY16
-29.0
348.0
-11.99
23.0
-1.0
-9.9
FY17
0.7
410.2
-
25.3
0.2
-7.1
FY18
52.2
450.6
8.64
28.5
2.0
0.3
FY19
97.6
448.8
4.60
33.1
3.3
6.8
FY20
57.1
533.6
9.35
36.5
1.9
-0.5
FY21E
128.8
402.3
3.12
29.2
4.7
12.3
FY22E
118.1
372.0
3.15
24.2
5.2
9.8
FY23E
106.0
333.3
3.14
23.3
4.8
7.3
Source: Company, MOFSL; Int. coverage ratio (Int cost/EBITDA incl other income)
Valuation remains comfortable:
At CMP, the stock is trading at 5.2x FY22E
EV/EBITDA and 0.5x P/B. We value the stock at 6.0x FY22E EV/EBITDA at
INR81/sh, implying target P/B of 0.7x (in line with the historical average).
Upgrade to
Buy.
2017
13.1
51
671
2018
14.1
3,705
52,176
4,50,632
2019
14.1
6,916
97,615
4,48,823
2022E
16.0
7,388
1,18,054
6.0
7,08,321
5,33,576 4,02,318 3,71,981
3,36,340
81
Source: MOFSL, Company
2020
14.2
4,012
57,097
2021E
14.8
8,715
1,28,843
Exhibit 2: Target price calculation
YEAR
Sales (m tons)
EBITDA (INR per ton)
EBITDA
Target EV/EBITDA(x)
Target EV
less: Net Debt (INR m)
Equity value
Target price (INR/sh.)
4,10,168
Exhibit 3: SAIL trading at 5.0x 1-yr fwd EV/EBITDA
15.0
EV/EBITDA (x)
Max (x)
Avg (x)
Min (x)
Exhibit 4: SAIL trading at 0.5x P/B
P/B (x)
2.0
1.5
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
13.2
12.0
9.4
6.8
1.7
10.0
5.1
3.9
1.0
0.5
0.0
1.0
0.7
0.4
0.2
5.0
0.5
0.0
Source: MOFSL
Source: MOFSL
31 January 2021
4
 Motilal Oswal Financial Services
SAIL
tory in charts
Exhibit 5: Volumes to grow at ~6% CAGR over FY20–22E
Sales (m tons)
8.6
7.1
14.1
14.2
Vol growth (%)
14.8
16.0
8.1
6.3
13.1
14.1
0.2
0.8
3.9
33,814
17.0
Exhibit 6: Realization to remain strong in FY22E
(INR/t)
40,877
47,444
43,328
46,116 45,974 45,000
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 7: EBITDA to grow at ~23% CAGR over FY20–23E
EBITDA (INR b)
6,896
52.0
3,693
29
0.4
97.3
56.9
128.7
117.9
105.8
4,000
EBITDA per ton
8,704
7,377
Exhibit 8: Expect higher operating cash flows over FY22–23E
IINR b
OCF
FCF post finance cost
196
127
22
62
72
0
-58
-33
-6
-87
102
28
110
37
6,233
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 9: Net debt to decline, ; leverage remains comfortable
for FY21E
Exhibit 10: Returns ratios to remain high in over FY22-–23E
Net Debt (INR b)
534
410
451
449
402
9.3
4.6
FY17
FY18
FY19
FY20
3.1
FY21E
3.2
FY22E
3.4
372
333
-2.9
0.3
-7.1
6.8
-0.5
Net Debt/EBITDA (RHS)
RoE
8.6
3.3
RoCE (pre-tax)
10.7
12.3
9.4
9.8
7.9
7.3
8.6
3.1
FY23E
Source: Company, MOFSL
Source: Company, MOFSL
31 January 2021
5
 Motilal Oswal Financial Services
SAIL
Financials and valuations
Income Statement (Consolidated)
Y/E March
Net Sales
Change (%)
EBITDA
Change (%)
EBITDA per ton (INR)
Depreciation
EBIT
Interest
Other income
PBT before EO
Extraordinary Item
PBT
Total Tax
Effective Rate (%)
Reported PAT
Change (%)
Share of Asso/JV
Minority Interest
Adjusted PAT
Change (%)
Balance Sheet (Consolidated)
Y/E March
Sources of Funds
Share Capital
Reserves and Surplus
Shareholders’ fund
Loans
Deferred Tax Liability
Minority Interest
Capital Employed
Application of Funds
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Investments
Curr. Assets
Inventory
Sundry Debtors
Cash & Bank Balances
Other assets
Loans and Advances
Current Liabilities
Sundry Creditors
Other Current Liabilities
Provisions
Net Current Assets
Application of Funds
FY17
4,45,018
13.8
671
-102.3
51
26,816
-26,145
25,278
4,495
-46,929
-2,167
-49,096
-19,595
39.9
-29,501
-28.8
1,939
-26,259
-37.1
FY18
5,75,600
29.3
52,176
7,677
3,705
30,660
21,516
28,228
4,152
-2,559
-5,556
-8,115
-2,452
30.2
-5,663
-80.8
2,849
1,063
-104.0
FY19
6,69,736
16.4
97,615
87
6,916
33,853
63,762
31,549
4,945
37,158
-3,894
33,264
12,005
36.1
21,258
-475.4
2,229
25,976
2,344
FY20
6,16,642
-7.9
57,097
-42
4,012
37,557
19,540
34,868
9,058
-6,270
37,342
31,073
11,809
38.0
19,264
-9.4
1,943
-1,944
-107
FY21E
6,81,834
10.6
1,28,843
125.7
8,715
39,310
89,533
29,193
8,285
68,625
2,249
70,874
31,070
43.8
39,804
106.6
1,943
53,203
-2,837.0
FY22E
7,34,703
7.8
1,18,054
-8.4
7,388
40,623
77,431
24,179
6,608
59,859
59,859
15,442
25.8
44,417
11.6
1,943
46,360
-12.9
(INR m)
FY23E
7,64,132
4.0
1,05,995
-10.2
6,242
41,232
64,763
23,332
5,867
47,298
47,298
12,202
25.8
35,096
-21.0
1,943
37,040
-20.1
(INR m)
FY23E
41,305
4,80,723
5,22,028
3,58,026
22,223
0
9,02,278
13,11,328
5,62,150
7,49,178
47,533
32,404
2,19,819
62,805
24,708
1,00,356
12,490
94,208
1,88,087
64,722
73,162
9,02,278
FY17
41,305
3,29,117
3,70,423
4,13,957
-38,488
0
7,45,892
8,41,918
3,38,915
5,03,003
2,32,754
24,755
1,57,361
29,347
3,788
81,395
5,263
52,258
1,74,303
65,213
-14,620
7,45,892
FY18
41,305
3,28,161
3,69,467
4,54,087
-41,620
0
7,81,934
9,55,829
3,69,575
5,86,254
1,83,954
26,289
1,70,243
38,710
3,456
98,731
5,154
75,330
1,92,655
62,871
-14,563
7,81,934
FY19
41,305
3,55,156
3,96,462
4,51,700
-28,668
0
8,19,494
10,17,173
4,03,428
6,13,745
1,60,136
29,748
1,95,103
44,975
2,877
98,091
6,180
72,321
1,92,930
66,110
15,865
8,19,494
FY20
41,305
3,73,797
4,15,102
5,38,026
-20,222
0
9,32,907
11,31,328
4,40,985
6,90,343
87,533
32,404
2,38,363
88,447
4,450
1,00,356
7,150
63,331
1,88,087
64,722
1,22,626
9,32,906
FY21E
41,305
4,09,471
4,50,776
4,38,026
10,843
0
8,99,645
11,91,328
4,80,295
7,11,033
67,533
32,404
2,05,484
74,721
35,708
1,00,356
9,276
84,062
1,88,087
64,722
88,675
8,99,645
FY22E
41,305
4,49,757
4,91,063
3,88,026
17,212
0
8,96,300
12,61,328
5,20,918
7,40,410
47,533
32,404
2,21,417
70,451
16,045
1,00,356
11,072
90,580
1,88,087
64,722
75,953
8,96,300
31 January 2021
6
 Motilal Oswal Financial Services
SAIL
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
Book Value per Share
Dividend Per Share
Valuation (x)
P/E
Cash PE
EV/EBITDA
EV/Sales
EV( USD/Ton)
Price to Book Value
Profitability Ratios (%)
EBITDA Margin
RoE
RoCE (pre-tax)
RoIC (pre-tax)
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
Cash Flow Statement
Y/E March
EBITDA
(Inc)/Dec in WC
Direct Taxes Paid
Other Items
CF from Oper. Activity
(Inc)/Dec in FA & CWIP
Free Cash Flows to Firm
Interest and Dividend
(Pur)/Sale of Invest.
CF from Inv. Activity
Issue of Shares
Inc / (Dec) in Debt
Interest Paid
Dividends Paid
CF from Finan. Activity
Inc / ( Dec) in Cash
Add: Opening Balance
Closing Balance
FY17
-6.4
-0.6
89.7
-8.8
-86.2
956.1
1.4
1,190
0.6
0.2
-7.1
-2.9
-5.3
110
24
129
43
0.6
1.1
FY18
0.3
6.1
89.4
217.6
9.3
13.1
1.2
1,181
0.6
9.1
0.3
3.4
4.1
80
25
108
53
0.7
1.2
FY19
6.3
13.3
96.0
8.9
4.2
7.0
1.0
1,175
0.6
14.6
6.8
8.6
10.7
85
25
106
46
0.8
1.1
FY20
-0.5
13.8
100.5
-119.0
4.1
13.4
1.2
1,311
0.6
9.3
-0.5
3.3
2.7
152
52
141
41
0.7
1.3
FY21E
12.9
19.2
109.1
1.0
4.3
2.9
4.9
0.9
1,045
0.5
18.9
12.3
10.7
11.4
105
40
110
45
0.8
0.9
FY22E
11.2
20.6
118.9
1.0
5.0
2.7
5.1
0.8
921
0.5
16.1
9.8
9.4
9.9
100
35
110
45
0.8
0.8
FY23E
9.0
18.5
126.4
1.0
6.2
3.0
5.3
0.7
811
0.4
13.9
7.3
7.9
8.1
90
30
105
45
0.8
0.6
(INR m)
FY23E
1,05,995
12,873
-8,609
1,10,258
-50,000
60,258
5,867
-44,133
-30,000
-23,332
-4,131
-57,463
8,663
16,045
24,708
FY17
671
17,457
125
3,348
21,601
-54,267
-32,666
-38
16
-54,290
58,300
-25,278
33,021
333
3,456
3,788
FY18
52,176
11,183
-1,371
-353
61,635
-66,045
-4,410
116
1,267
-64,662
31,210
-28,515
2,694
-333
3,788
3,456
FY19
97,615
-26,646
22
1,161
72,152
-38,805
33,347
1,301
265
-37,239
-2,387
-33,104
-35,491
-579
3,456
2,877
FY20
57,097
-1,06,582
-935
44,249
-6,171
-43,813
-49,984
1,464
62
-42,287
89,074
-36,538
-2,505
50,032
1,573
2,877
4,450
FY21E
1,28,843
67,335
-2,131
2,249
1,96,296
-40,000
1,56,296
8,285
-31,715
-1,00,000
-29,193
-4,131
-1,33,323
31,258
4,450
35,708
FY22E
1,18,054
-5,145
-10,870
1,02,039
-50,000
52,039
6,608
-43,392
-50,000
-24,179
-4,131
-78,309
-19,663
35,708
16,045
31 January 2021
7
 Motilal Oswal Financial Services
SAIL
NOTES
31 January 2021
8
 Motilal Oswal Financial Services
SAIL
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products.
MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on
www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading
Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity
& Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository
Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory &
Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are available on the
website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should
be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant
banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from
MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or
use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong
Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act"
and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and
investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for
distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document
relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule
15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order
to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities
International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in
respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of
which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
31 January 2021
9
 Motilal Oswal Financial Services
SAIL
The associates of MOFSL may have:
-
financial interest in the subject company
-
actual/beneficial ownership of 1% or more securities in the subject company
-
received compensation/other benefits from the subject company in the past 12 months
-
other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
-
acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
-
be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
-
received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of
MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature.
The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed,
in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose
and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report
constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities
discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives,
financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document
should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including
the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be
suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial
risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions
contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as
endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and
alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect
or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment
banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and
independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already
available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the
views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other
person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of
or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject
MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category
of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors,
employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may
arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any
and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold
MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person accessing this information due to any
errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management
Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of
Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a
group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory
services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee
of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj
Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
31 January 2021
10