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• SAIL reported a standalone net profit of Rs 834 crore for Q2, a 32.7% decline from the previous year due to cheap Chinese imports.
• Despite challenges, SAIL's Q2 performance improved compared to the previous quarter with increased revenue, EBITDA, and sales volume.
• SAIL Chairman, Amarendu Prakash, expects better results in H2 FY'25 due to a projected downtrend in steel imports and growth in GDP & capital expenditure.
• SAIL plans to invest Rs 6,500 crore towards capex during the current financial year, indicating a positive outlook for the future.

The Steel Authority of India Limited (SAIL), a public sector steel behemoth, has reported a standalone net profit of Rs 834 crore for the July-September quarter of the current financial year. This figure represents a 32.7 per cent decline from the corresponding figure of Rs 1,241 crore during the same quarter of the previous financial year. The company's revenue was adversely impacted by the influx of cheap Chinese imports, which led to a decline in steel prices.

SAIL's revenue fell by 17 per cent to Rs 24,675 crore during the second quarter, compared to Rs 29,714 crore in the same quarter of the previous year. The company's earnings before interest, taxes, depreciation, and amortisation (EBITDA) also declined to Rs 3,174 crore during the second quarter from Rs 4,043 crore in the same period last year.

Despite these challenges, SAIL's performance in the second quarter of the current financial year has shown improvement compared to the previous quarter. Revenue from operations, EBITDA, and sales volume all increased in Q2 FY'25 over Q1 FY'25.

SAIL's Future Outlook and Investment Plans

However, the lower performance in Q2 FY'25 compared to the same period last year (Q2 FY'24) was influenced by factors like cheaper imports which led to a decline in prices. SAIL Chairman Amarendu Prakash commented on the results, stating, We expect H2 FY'25 to bring more promising results compared to H1 FY'25, which was impacted by various challenges. Moving forward, with the expected downtrend in steel imports and projected growth in GDP & capital expenditure, the second half of FY'25 may yield better performance.

SAIL has plans to invest Rs 6,500 crore towards capex during the current financial year as part of its Rs 1 lakh crore investment plan over the next few years. Prakash had previously stated that SAIL has a regular capex on maintaining its facilities, as well as debottlenecking exercises. Most of the capex expansion to be invested by 2030 will start flowing from FY26.

Comparative Analysis with Other Major Companies

This news comes in the backdrop of other major companies reporting their Q2 results. Reliance Industries Ltd (RIL) reported a 5% decline in its consolidated net profit to Rs 16,563 crore for the second quarter ended September 2024. The same stood at Rs 17394 crore in the year-ago period. Meanwhile, Harmonic Inc. reported robust financial results for the second quarter of 2024, surpassing expectations with significant growth in both Broadband and Video segments.

In the past, companies like Larsen & Toubro and JSW Energy have also reported steady growth across all financial parameters despite various challenges. These companies have also made significant investments in their respective sectors, indicating a positive trend in the Indian economy.

The current scenario reflects the broader trend in many economies. The slowdown in India is similar to what is being witnessed in many emerging economies, posing a threat to a sustained global recovery. However, there are green shoots of recovery being seen in the global economy. As per IMF, the world economy is projected to grow at 3.6 per cent in 2024 vis-à-vis 3.0 per cent in 2023, with the Euro area expected to register a positive growth after the contraction witnessed in 2022 and 2023.