Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– Steel Authority- SteelofAuthorityIndia Limited (SAIL.NS)of India Limited (SAIL.NS)

Margin expansion priced in; unattractive valuation drives UW

PRICE TARGET Rs160.00 UNDERWEIGHT THESIS

Probability-weighted target EV/EBITDA: base case 70%, bull case 20% (upside from improved ▪SAIL has the lowest profitability in our

global macroeconomic environment supports steel prices and volumes in the medium term, steel coverage on a per tonne basis given its

further supported by safeguard duty extension), bear case 10% (downside risks from high cost structure. During times of

unfavorable demand/supply and steel price outlook in the medium term). Key assumptions - compression in spreads, SAIL is affected

target Jun-28 EV/EBITDA: bull case: ~7.0x; base case: ~6.0x; bear case: ~5.0x. more than peers, but during times of spread

expansion, it should benefit the most as Rs174.18

well.

Consensus Price Target Distribution Rs125.00 Rs230.00 expect SAIL’s EBITDA/t to improve MS PT ▪We

over the next couple of years, led by higherSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

steel prices.

▪The stock has done well against this

backdrop, but current valuation at F27e

RISK REWARD CHART EV/EBITDA of ~7.7x looks unattractive vs.

peers, in our view.

INR

Rs255.00Rs255.00(+56.81%)Rs255.00(+56.81%)(+56.81%)

Consensus Rating Distribution

240 22% Overweight

19% Equal-weight

59% Underweight

MS Rating Rs162.62Rs162.62Rs162.62 Rs160.00Rs160.00(-1.61%)Rs160.00(-1.61%)(-1.61%)

Source: Refinitiv, Morgan Stanley Research

Risk Reward Themes

60 Rs75.00Rs75.00(-53.88%)Rs75.00(-53.88%)(-53.88%) Self-help: Negative

View descriptions of Risk Rewards Themes here

JUL '25 JAN '26 JUL '26 JUL '27