Jhunjhunwala’s PSU bet facing headwinds amid elevated coking coal costs
NEW DELHI: SAIL, a Jhunjhunwala stock bet, is reeling under the double whammy of higher coking coal costs and lower steel realisation, which Kotak Institutional Equities says should result in sharp margin contraction in the second half of FY22.
The brokerage has cut its fair value target for SAIL to Rs 110 from 135 earlier as higher coking coal costs impact SAIL more than peers due to higher consumption whereas sector-low margin increases sensitivity.
It forecast 20 per cent downside risk to consensus Ebitda estimates for FY2022-23E and said the increase in capex and lower margins in H2FY22 should fade the deleveraging tailwind for SAIL.
