Axis Securities boom on il l l, upgrade to ‘Buy’ with a target of 130 rupees

With the spread of steel, domestic brokerage Pay FIRM Axis Securities sees the risk of being suited to the sail, as it upgrades the stock previously ‘hold’ from ‘hold’ to ‘by’ rating, while the target price offers 130.

“Spread steel, we have predicted risk-earned turfuring for S IL L.

The target price on the stock indicates a 19% side -rise potential at its expiration price on Tuesday.

Brokerage Pay FirM believes that sail steel and coking have more sensitivity to coal prices. The price of hot rolled coil (HRC) is Rs. 1000/t increase increases EBITDA (4% for Tata Steel) of Sail and a $ 10/t reduction in coking coal prices increase by 10% in EBITDA.

Commenting on the expansion and profitability of the sail, the report notes that the sail is planning a larger expansion, its steel production capacity is increasing from 20 million tonnes (MT) to 35 MT in multiple stages, of which total capital costs (capex) cost Rs. 1.1-1.2 lakh crore.

In the first phase, it aims to add 7.5 MT by FY13, with approval for projects in Icco, Bokaro and Durgapur. The second phase, which includes expansion in Rorkela and Durgapur, is still waiting for approval and will add more than 7.5 metric.

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However, there is concern about Debt Debt levels and past delays, as it faced significant delays and costs earlier when expanding its hot metal capacity from 14.6 MT to 25 mm.

In addition, the next round of capex is expected to start at H2FY26/FY27 and peak in FY 28/29, alert investors. In the near term, the spread of steel will play a crucial role in determining the stock movement of the sail.

Despite these concerns, Axis Securities believes that the risk-pure balance of the recent submerged stock in valuation multiplication makes the balance more favorable.

Finally, the total borrowing quarter-on-quarter (QQ) of the sail fell to Rs 32,600 crore to Rs. 35,596 crore. The company aims to reduce its debt to Rs 30,500 crore, which is brought with the levels seen at the end of FY 24.

However, as the company entered its next phase of expansion from FY 27, there is a risk of increasing benefits. Cell has set a Debt-to-equity target of 1: 1 during this expansion, but there are concerns about the risks of execution, including potential delays or overruns of cost, which can affect its financial stability.

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