02
Aug
11

SAIL poor Q1 results

Steel Authority of India Ltd. announced poor Q1 results on Friday. Results were below estimates. Sales were up 19.6% but PAT was down 29% YoY on account high raw material prices primarily coking coal. SAIL imports 70% of its coking coal requirements and its prices were up from USD 200 per tonne to USD 300 per tonne. Apart from raw material cost, employee costs were also up 12% YoY. Yesterday SAIL stock got sharp negative reaction from market and stock was down close to 5%. I was not confident about the extent of fall, so didn’t shorted SAIL. But I am confident that poor results coupled with FPO overhang will keep stock under pressure. Even mining scam news flow will keep pressure on metal and mining stocks. I sold August series 140 calls. These calls will yield 4.62% in 25 days.

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