SAIL Shares Hit 20-Month High on Emkay Global Upgrade

SAIL Shares Hit 20-Month High on Emkay Global Upgrade: A Deep Dive into India's Steel Giant's Future in February 2026

Shares of Steel Authority of India (SAIL) have surged by an impressive 4.4% on the National Stock Exchange (NSE), reaching a significant 20-month high of ₹167.20 per share as of February 25, 2026. This robust upward momentum follows a strategic upgrade from leading brokerage Emkay Global Financial Services, which has revised its target price for SAIL to ₹200, a notable increase from its previous ₹175 target. This positive re-rating reflects an optimistic outlook on the public sector enterprise's earnings recovery and operational efficiency amidst a strengthening Indian steel sector. The current market capitalization of SAIL stands at approximately ₹68,484 crore.

The Catalyst

Emkay Global's decision to upgrade SAIL stems from a combination of attractive valuations and ongoing operational enhancements within the company. Analysts at the brokerage highlight key improvements such as a better product mix and enhanced coal blending efficiencies, which are expected to bolster profitability. The brokerage anticipates that SAIL's margins will stabilize due to ongoing inventory liquidation and firmer domestic steel prices, factors poised to significantly strengthen the company's near-term financial performance. This optimistic forecast comes despite an anticipated 18% quarter-on-quarter increase in coking coal expenses, as Emkay Global predicts that improved realizations and inventory unwinding will largely offset these rising input costs, paving the way for a sharp earnings recovery. The Nifty Metal Index itself has shown strong performance, with a 1-month return of 5.19% and a 1-year return of 43.35% as of February 24, 2026, indicating a broader positive trend in the sector.

Financial Forensics

While SAIL reported a 21.41% year-on-year profit decline and a 2.75% sales drop in FY2025, primarily driven by weak domestic demand and export competition, the outlook for FY2026 appears significantly brighter. Analysts are now forecasting a sharp earnings recovery, with EBITDA/tonne (Earnings Before Interest, Taxes, Depreciation, and Amortization per tonne) projected to rise to ₹7,000-₹7,500 in the next two quarters, a substantial increase from approximately ₹4,500/tonne in Q3 FY2026. This growth is expected to be fueled by inventory unwinding and improved realizations, with average prices for flats and longs showing 11% and 17% quarter-to-date increases, respectively, compared to Q3.

Moreover, revenue estimates for FY2026 have been revised upward by 1.29%, and Earnings Per Share (EPS) estimates have seen a robust upward revision of 9.42% over the past three months. These revisions underscore growing confidence in SAIL's fundamental performance despite the cyclical nature of the steel industry. The company's current Price-to-Earnings (P/E) ratio stands at 22.6, with a Price-to-Book (P/B) value of 1.16 times its book value, suggesting fair market pricing for a Public Sector Undertaking (PSU) with its return characteristics.

SAIL's Key Financial Metrics (As of February 25, 2026)

Metric	Value	Commentary	Source
Current Share Price	₹167.20	Trading at a 20-month high.	Prompt
Emkay Global Target Price	₹200	Upgraded from ₹175, reflecting positive earnings outlook.
Market Capitalization	₹68,484 Cr.	One of India's largest steel producers.
P/E Ratio	22.6x	Trading at a fair valuation for a PSU.
P/B Ratio	1.16x	Slightly above book value, indicating fair market pricing.
ROE (FY25)	3.91%	Lower returns reflecting the cyclical nature and prior profit decline.
ROC (FY25)	6.34%	Moderate capital efficiency.
Sales Growth (5-year)	10.7%	Steady growth over the longer term.

Market Impact

This positive upgrade for SAIL could significantly enhance its market position. The anticipated earnings recovery is also expected to accelerate the company's deleveraging efforts in FY26, a crucial step for improving its financial health. The broader steel industry in India is currently experiencing a period of strengthening, with the BigMint India Steel Composite Index rising by 1.7% week-on-week as of early February 2026. This uptrend is supported by mill price hikes, improving market sentiment, and a strong demand outlook for the fourth quarter. Domestic steel prices, including Hot Rolled Coil (HRC) and Cold Rolled Coil (CRC) list prices, have seen cumulative monthly hikes, driven by healthy order bookings and shrinking inventories at primary mills.

However, the industry continues to navigate fluctuating input costs, particularly rising coking coal prices. India remains heavily reliant on coking coal imports, with Australia being the primary supplier, making the industry vulnerable to global price volatility. Despite this, SAIL's proactive measures to improve operational efficiencies, such as better product mix and coal blending, could position it favorably amidst these challenges. The Nifty Metal Index, which includes major players like SAIL, provides broad exposure to the Indian metals and mining industry, indicating that a positive sentiment towards a bellwether like SAIL often reflects confidence across the sector.

Key Takeaways for Investors

• Positive Momentum: SAIL's stock has demonstrated strong recent performance, hitting a 20-month high, backed by a significant target price upgrade from Emkay Global. The 1-year return for SAIL stands at 56.26%.
• Earnings Recovery: Expect a sharp earnings recovery in the coming quarters for SAIL, driven by improved realizations and inventory management, which are crucial for the company's financial health in FY26.
• Operational Efficiency: Focus on internal operational improvements, including product mix and coal blending, is expected to stabilize and improve margins.
• Sectoral Tailwinds: The broader Indian steel sector is showing signs of strengthening, with rising domestic demand and firming prices, benefiting from government infrastructure spending.
• Cost Headwinds: Investors should monitor the impact of rising global coking coal costs, which remain a key challenge for the steel industry.

FinScann Verdict

FinScann analysis suggests that Emkay Global's upgrade on SAIL is well-founded, reflecting a confluence of internal operational improvements and a supportive domestic market environment. While global coking coal costs present a continued challenge, SAIL's strategic focus on efficiency and the anticipated earnings recovery in FY26 are strong positives. The upward revision in analyst estimates for FY2026 EPS further solidifies a cautiously optimistic view, indicating that SAIL is poised for a robust performance in the near to medium term as it navigates the current steel cycle and benefits from India's infrastructure push.

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Q: Is Steel Authority of India (SAIL) a good investment in 2026? A: According to some analyses, SAIL is a strategically important PSU benefiting from government infrastructure spending and stable domestic demand, which could lead to gradual price appreciation in 2026. While past profit declines have been noted, the anticipated earnings recovery and operational improvements make it an attractive consideration for investors with a medium-term outlook. However, it's trading slightly above its book value, and return ratios remain moderate due to the cyclical nature of steel margins.

Q: What is the current target price for SAIL shares? A: Emkay Global has recently upgraded its target price for SAIL to ₹200 per share, up from ₹175. Other analyst consensus targets vary, with an average 1-year price target around ₹144.12, but some forecasts go as high as ₹199.50 for the next year and even up to ₹270 by 2030.

Q: How do coking coal prices affect SAIL's profitability? A: Coking coal is a primary raw material for steel production, and its price volatility directly impacts SAIL's production costs and margins. India is heavily reliant on imported coking coal, particularly from Australia. Rising coking coal costs, such as the 18% quarter-on-quarter increase noted by Emkay Global, can squeeze profitability. However, improved steel realizations and operational efficiencies can partially offset these cost pressures, as expected for SAIL in the near future.

Q: What is the outlook for the Indian steel sector in 2026? A: The Indian steel sector is generally positive for 2026, driven by stable domestic demand and ongoing infrastructure projects. The market strengthened in early February 2026 with rising prices and strong demand outlook. However, some reports suggest a moderation in steel demand growth to 7-8% in FY2026, and the operating environment might remain challenging due to subdued steel prices and sticky input costs, which could keep operating margins relatively flat.

Q: What are the key factors influencing SAIL's share price? A: Key factors influencing SAIL's share price include domestic steel demand (driven by infrastructure and construction), global steel price cycles, operational efficiency improvements (like product mix and coal blending), and raw material costs (especially coking coal). Government policies, such as safeguard duties against imports, also play a significant role in protecting domestic prices and market share.

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Disclaimer: For information only; not investment advice. Stock market investments carry risks. Please consult a SEBI-registered advisor before investing. FinScann assumes no liability for decisions made based on this report.