Steel Authority of India · Material risks, their source context, and severity in the latest available quarter.
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Coking coal costs increased from Q3 average of ₹18,350/ton to ₹18,500 in January and expected ₹19,700 in February (+₹1,200) and another ₹1,000 in March. Spot prices at $251/ton (vs ~$184 Q3 average) will create cost headwinds despite price increases.
Analyst questioned the sizable cost disadvantage versus peers. Management acknowledged the gap but did not quantify the expected narrowing timeline beyond ISP expansion benefits (FY30). Current EBITDA/ton of ₹6,000-7,000 vs industry benchmarks remains a concern.
Analyst directly questioned the profitability of the NSL trading arrangement (1M tons in 9M). Management gave evasive answers, stating 'margins are small' and 'the delta we can't exactly say.' Actual contribution to SAIL's profitability remains unclear.
Employee wage revision will be effective from January 1, 2027, creating cost pressure from FY28 onwards. While annual manpower reduction (~50,000 legacy employees on rolls) provides some offset, the quantum of wage hike is unknown and will impact margins.
