Rakesh Jhunjhunwala stock: SAIL shares surge 13% amid better than expected Q2 results

On the back of best-ever quarterly results, Steel Authority of India (SAIL) shares surged over 13 per cent to Rs 130.35 per share on the BSE intraday on Monday. Ace investor Rakesh Jhunjhunwala has increased stake in the company by 0.4 per cent to 1.8 per cent during the September quarter.  

SAIL on Friday reported a standalone profit after tax (PAT) of Rs 4,304 crore for the second quarter of the financial year 2021 (Q2FY22) as compared to Rs 393 crore in the same period a year ago.  

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While its standalone revenue from operations jumped 58 per cent year on year (YoY) at Rs 26,827 crore in Q2FY22 as against Rs 16,923 crore in Q2FY21.  

Similarly, the company’s standalone EBITDA for the quarter stood at Rs 7,017 crore, up 269 per cent YoY; and the margin grew by 1493 bps YoY but down 564 bps QoQ and at 26.2 per cent. 

Moreover, during the results declaration SAIL also announced an interim dividend of Rs 4 per equity share or 40 per cent of the paid up equity share capital of the company. 

According to the September shareholding pattern, Ace investor Rakesh Jhunjhunwala held a 72.5 million or 1.76 per cent stake in SAIL. 

At around 02:02 pm, the stock has been trading 8 per cent higher to Rs 124.75 on the BSE on the back of heavy volumes, as compared to a 1.27 per cent rise in the S&P BSE Sensex.  

The trading volumes on the counter jumped 1.5 times with a combined 138 million equity shares having changed hands on the NSE and BSE.  

SAIL’s Q2 EBITDA in line with higher volumes offsetting weaker margin, Kotak Institutional Equities said while maintaining a Buy stance on the company shares with a price target of Rs 135 per share. It added, the company would benefit from stronger volumes in the second half of the current fiscal. 

JP Morgan raises FY23-24 estimates for SAIL by 7-21 per cent and sees upside earnings risk to estimates, it upgrades the company to Overweight and revises the price target to Rs 165 from 15 per share. The brokerage points out SAIL expects further net debt reduction from here.