Maharatna steel stock is in the spotlight following the company’s announcement to more than double the capacity of its Rourkela Steel Plant to 9 million tonnes per year. The expansion, backed by an investment of Rs.30,000 crore, is gonna be significantly boosting the company’s growth prospects.
Price Action
During Friday’s trading session, shares of Steel Authority of India Ltd jumped to an intraday peak of Rs.115.89 each, reflecting a 1.3 percent increase from the prior closing price of Rs.113.96 per share. However, the stock retreated later and closed at Rs.115.17 apiece. Over the past five years, the stock has delivered over 300 percent returns.
Capacity Enhancement
State-owned SAIL plans to more than double the capacity of its Rourkela Steel Plant (RSP) to around 9 million tonnes per annum with an investment of Rs. 30,000 crore. This expansion will boost supplies to key sectors such as defence, oil & gas, and automobiles. Once completed, RSP will contribute 25 percent to SAIL’s 35 MTPA production target by 2030. The expansion, covering 1,200 acres, will significantly enhance the plant’s output.
Located in Rourkela, Odisha, 320 km from Bhubaneswar, RSP is India’s first public sector steel plant, set up in the 1950s with German collaboration and an initial capacity of 1 MT. Currently, SAIL’s total steelmaking capacity stands at 20.30 MTPA, with RSP contributing 4.4 MTPA. By 2030, RSP’s capacity will increase by 5 MTPA, reaching 9.4 MTPA.
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Management Commentary
“Through this expansion, our goal is to capture a significant share of the sectors we serve,” said Alok Verma, Director In-Charge, RSP. He highlighted that RSP produces a range of products, including plates, hot rolled (HR) coils, spiral welded and electric resistance welded pipes, and cold rolled non-oriented (CRNO) steel. These products are used in industries such as shipbuilding, rail wagons, LPG cylinders, automobiles, oil and gas, motors, generators, and transformers.
Verma further explained that the expansion will require approximately 1,200 acres on the southeastern side of the plant, with an investment of around Rs.30,000 crore. The key facilities planned for the expansion include a raw material handling plant, coke oven stamp charge battery, sinter plant, thin slab caster-direct rolling, cold rolling mill, silicon mill, and logistics infrastructure.
Earnings Report
According to its recent financial updates, SAIL Ltd reported remarkable consolidated revenue of Rs.24,490 crores in Q3 FY25, marking a 5 percent increase from Rs.23,349 crores in Q3 FY24. However, the company saw a 66 percent decline in net profit to Rs.142 crores, compared to Rs.423 crores in the same period.
Ratio Analysis
The company has a Return on Capital Employed (ROCE) of 6.57 percent and a Return on Equity (ROE) of 5.48 percent. Its Price-to-Earnings (P/E) ratio stands at 14.98, lower than the industry average of 33.51. Furthermore, the company maintains a current ratio of 1.8, a debt-to-equity ratio of 0.72, and an Earnings Per Share (EPS) of Rs.7.07.
Written by – Siddesh S Raskar
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