Steel Authority of India shares drop following Citi downgrade

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Steel Authority of India shares drop following Citi downgrade
Credit: © Reuters.

Shares of Steel Authority of India Limited (NS: SAIL ), a Maharatna company and Public Sector Undertaking, experienced a decrease on Monday, with the company's stock falling by 1.27% or Rs 1.10 to Rs 85.74 on the BSE and by 1.32% to Rs 85.70 each on the NSE. This drop comes in the wake of a downgrade by Citi, which adjusted its rating for SAIL from 'buy' to 'sell' and reduced the share price target from Rs 110 to Rs 80.

Despite the recent downgrade, it's worth noting that over the past three years, SAIL has provided multibagger returns of 125.63%, leading to substantial gains for its investors. The company, incorporated on January 24, 1973, employs 59,350 individuals and reported an annual turnover of Rs 105,398 crore for the financial year 2022-23.

In addition to the downgrade, SAIL is preparing to announce its quarterly results on November 10. Ahead of this announcement, Chairman Amarendu Prakash has expressed an intent to increase purchases of coking coal from Russia due to its cost-effectiveness compared to bulk imports currently sourced from Australia and the US. Four shipments of 75,000 tonnes each are expected as part of this initiative.

InvestingPro Insights

Drawing from InvestingPro's real-time data and expert tips, we can delve deeper into the financial health and performance of Steel Authority of India Limited (SAIL). SAIL operates with a significant debt burden and a declining trend in earnings per share, as highlighted by InvestingPro Tips. This might explain Citi's decision to downgrade its rating for the company.

On the other hand, InvestingPro's data reveals that SAIL has an impressive gross profit margin of 44.09% as of Q1 2024, indicating a strong ability to convert revenues into profits. Furthermore, the company's market cap stands at 4261.55M USD, demonstrating a substantial market presence.

Looking at valuation metrics, the company has a P/E ratio of 22.38, which may seem high given the company's debt and earnings challenges. However, it's important to note that SAIL is a prominent player in the Metals & Mining industry and has been profitable over the last twelve months.

In conclusion, while SAIL faces certain financial challenges, it also exhibits strengths that could offer potential opportunities for investors. For more insights like these, consider exploring the additional 7 InvestingPro Tips available for SAIL.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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