SAIL plunges over 5 per cent as Q1 loss widens to Rs 535.52 cr, should you retain its stocks?

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Updated: September 9, 2016 4:40:43 PM

Steel Authority of India (SAIL) shares plunged over 6 per cent after the company announced its first quarter results on Thursday, in which it posted net loss of Rs 535.52 crore in comparison to a net loss of Rs 248.18 crore for the same quarter in the previous year.

SAIL plunges over 6 per cent as Q1 loss widens to Rs Rs 535.52 cr, should you retain its stocks?Steel Authority of India (SAIL) shares plunged over 6 per cent on Friday after the company announced its first quarter results on Thursday, in which it posted net loss of Rs 535.52 crore in comparison to a net loss of Rs 248.18 crore for the same quarter in the previous year. (Photo: Reuters)

Steel Authority of India (SAIL) shares plunged over 5 per cent on Friday after the company announced its first quarter results on Thursday, in which it posted net loss of Rs 535.52 crore in comparison to a net loss of Rs 248.18 crore for the same quarter in the previous year. Total income of the company stood at Rs 9327.36 crore, registering a fall of 3.84% for quarter under review as compared to Rs 9699.98 crore for the quarter ended June 30, 2015.

Reacting to the news, SAIL shares were trading 4.28 per cent down at Rs 51.40. The scrip opened at Rs 50.50 and touched a high and low of Rs 52.20 and Rs 50.30, respectively. Later, the scrip settled 5.68 per cent down at Rs 50.65.

SAIL chairman P K Singh told PTI while briefing on results in present market conditions the company is following a strategy of concentrating on customer, competition and change to attain its targets. He said: “We believe that on the back of a strong monsoon and government’s plans to invest massively in infrastructure such as roads, railways, highways, ports would result in increased steel demand in the second half of the current financial year.” According to Jefferies as quoted by Reuters that domestic steel prices could improve in the second half, but margin pressure is unlikely to ease, given upcoming wage hike in 4Q FY17. It has maintianed the ‘Underperform’ rating for the company’s stocks with target price of Rs 32.

While announcing the results on Thursday, the company cited drop in sales realisation and higher interest and depreciation charges as the reason behind widening loss.

SAIL is country’s largest steel producing company and is among the five Maharatnas of Central Public Sector Enterprises. The company has five integrated steel plants, three special plants, and one subsidiary in different parts of the country.

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