SAIL Steels Ahead: A Deep Dive into Q2 and H1 FY'26 Performance

Steel Authority of India Limited (SAIL) has navigated a dynamic market landscape to deliver a robust performance in the second quarter and first half of fiscal year 2026. Despite global economic uncertainties and domestic market pressures, the steel giant showcased resilience, strategic execution, and a clear path for future growth. The company reported a significant increase in profitability, driven by strong sales volumes and effective financial management, setting a positive tone for the remainder of the fiscal year.

For H1 FY'26, SAIL's sales turnover reached an impressive Rs. 52,254 crore, marking an 8% growth compared to the previous year. This robust top-line performance translated into substantial bottom-line improvements, with Profit Before Tax (PBT) soaring by 28% to Rs. 1,443 crore and Profit After Tax (PAT) increasing by a remarkable 32% to Rs. 1,112 crore. The EBITDA margin stood at 11.01% for H1 FY'26, reflecting efficient operations and cost control measures. These figures underscore SAIL's ability to enhance shareholder value amidst challenging market conditions.

Operational Excellence and Strategic Sales

SAIL's operational performance was a key driver of its financial success. The company achieved a crude steel production of 9.503 million tons and saleable steel production of 9.567 million tons in H1 FY'26. The sales volume witnessed a significant surge, growing by approximately 17% to 9.46 million tons compared to 8.11 million tons in H1 of the previous year. This growth was not merely organic; it was strategically supported by proactive inventory liquidation, including by-products and scrap items, which helped improve overall realization and reduce working capital requirements. The company's domestic sales accounted for 9.280 million tons, with exports contributing 0.182 million tons.

The product mix also played a crucial role, with a continued focus on value-added products. The share of value-added products reached around 57% in Q2 FY'26, up from 55% in Q1 FY'26, with management targeting over 60% going forward. This shift towards higher-margin products is expected to further enhance profitability. The sales mix for H1 FY'26 saw HR Plates/Coils/Sheets contributing 29%, Bars & Rods 22%, PM Plates 16%, Structurals 9%, Rly Products 8%, Semis 8.5%, CR Coils/Sheets 6%, and PET/Galvanized Products each 1%.

Financial Prudence and Future Investments

One of the most commendable aspects of SAIL's H1 FY'26 performance is its significant debt reduction. The company reduced its borrowings by over Rs. 3,000 crore compared to the same period last year, bringing non-IndAS borrowings down to Rs. 26,427 crore as of September 30, 2025. This disciplined approach to debt management has substantially lowered the interest burden, contributing directly to the improved profitability. Management aims to further reduce the non-IndAS debt-equity ratio to 0.3-0.4 by the year-end, creating ample headroom for future capital expenditure.

Looking ahead, SAIL has ambitious investment plans. The company is targeting CAPEX in excess of Rs. 7,500 crore for the current fiscal year, which is projected to increase substantially to over Rs. 10,000 crore in FY'26-27 and beyond. These investments are primarily directed towards the 4.5 million tons capacity expansion at the IISCO steel plant, estimated at Rs. 36,000 crore, and various de-bottlenecking projects across other plants like Durgapur, Bhilai, and Rourkela. These initiatives are expected to drive production and sales volume growth of 5-7% in FY'26-27, ensuring long-term sustainable growth.

Market Outlook and Management Confidence

Despite global headwinds such as fighting inflation, slowdowns in advanced economies, and geopolitical conflicts, the outlook for the Indian economy and steel sector remains positive. The IMF has revised global GDP growth projections upwards, and India's GDP growth is expected to be around 6.3% by various agencies. The domestic steel demand is projected to increase, with the World Steel Association forecasting an 8.5% increase in CY2025. Management anticipates an uptick in demand and easing pricing pressures in the later part of Q3 and Q4 FY'26.

SAIL's management expressed confidence in maintaining the momentum, expecting EBITDA margins to improve in Q3 and potentially reach 14-15% in Q4 FY'26, driven by the completion of capital repairs, improved production, and better market conditions. The company remains committed to sustainable performance, focusing on decarbonization, capacity utilization, value addition, and cost competitiveness. This quarter's performance reflects strategic clarity and disciplined execution, positioning SAIL for sustained growth and continued value creation for its stakeholders.