SAIL Q2 FY27 Earnings Call: Unveils Rs. 1.2 Lakh Cr Expansion, Volume-Led PAT Jumps 4x

SAIL held its Q2 FY27 earnings call on October 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Volume-led quarter; profitability up sharply YoY but EBITDA/tonne below street estimates

• Q2 FY 2026-2027 turnover of Rs.31,766 crore — up 20% YoY and 22% QoQ on higher volumes, despite falling realizations; crude steel production at 4.85 MT (+2% QoQ, +4% YoY) and sales of 5.2 MT (+5% YoY, +24% QoQ).
• PAT of Rs.1,774 crore vs Rs.427 crore in Q2 FY 2025-2026; PBT of Rs.2,356 crore vs Rs.553 crore YoY. Q1 FY 2026-2027 comparatives: PBT Rs.2,159 crore, PAT Rs.1,636 crore.
• EBITDA of Rs.4,561 crore — margins pressured as imported coking coal prices rose through the quarter; EBITDA/tonne of Rs.8,170 came in below market estimates of Rs.8,500-8,700/t cited on the call.
• H1 FY 2026-2027: turnover Rs.57,776 crore (+11% YoY), EBITDA Rs.8,917 crore (+55%), PBT Rs.4,515 crore (+213%), PAT Rs.3,410 crore (+207%) vs H1 FY 2025-2026; production 9.61 MT (+2% YoY), sales 9.33 MT.
• Rs.700-800 crore of benefits in Q2 from stock reduction, higher sales and higher high-end production; interest cost fell ~Rs.98 crore, aided by market improvement from September 2026 — offsetting unprecedented rains in Jharkhand and Odisha that hit production and techno-economic parameters.
• Q2 EBITDA/tonne moderation attributed by CMD Ashok Panda to lower NSR, imported coal cost inflation and the rains; he noted Q2 is generally weak for most coastal-belt plants.

FY27 sales guidance clarified at ~21 MT; rails and high-end mix in focus

• FY 2026-2027 sellable steel sales guided at ~21 million tons — CMD Ashok Panda: "we are looking at 21 million tons right now." Analyst Rakesh Roy (Omkara Capital) flagged that Q4 FY26 commentary had indicated 22 million tons; management clarified the 22 MT figure corresponds to crude steel production from SMSC, not sellable sales.
• H1 FY 2026-2027 volumes of 9.33 million tons underpin the ~21 MT estimate, with management expecting Q3 and Q4 FY27 to be very good for production and sales.
• RINL third-party sales of 88,000 tons in Q2 (184,000 tons cited for H1 FY 2026-2027), included within the 21 MT FY27 target; full-year RINL volumes expected at a maximum of 500,000 tons. NSL third-party sales are nil for FY 2026-2027 — management is "not doing anything for NSL." RINL revenue is booked gross, with only the margin flowing through at EBITDA level, which the CMD described as "very less."
• Product mix (share of production volumes, FY 2026-2027): rails ~8%, bar & rod ~22%; rails contribute more than 8% of turnover. Rail dispatches were ~1.2 million tons in FY 2025-2026; SAIL expects to sell ~1.2-1.3 million tons in FY 2026-2027.
• Rail price division impact: none in Q2 FY 2026-2027; Q1 FY 2026-2027 carried ~Rs.300 crore, and management believes the impact will be positive rather than negative going forward.
• Iron ore fines sales of ~2.5 MT in H1 vs 0.9 MT in H1 FY 2025-2026; management targeting 7-8 MT for FY 2026-2027 despite challenges.

Coking coal guidance missed in Q2; Q3 average seen ~Rs.1,000 higher

• Imported coking coal at Rs.22,930/ton in Q2, up Rs.1,700/ton from Rs.21,300/ton in Q1 FY 2026-2027 — attributed by the CMD to geopolitical situations and problems in China that spiked international demand. The Q1 call guidance of Rs.1,000-2,000 reductions in August/September did not materialize.
• Q3 FY 2026-2027 imported coal expected to average ~Rs.23,800-23,900/ton (segment 10) / around Rs.23,500/ton (segment 4) — roughly Rs.1,000 higher than Q2 — easing to around Rs.22,000/ton in Q4 FY 2026-2027; October at Rs.24,000-24,100, November similar, December possibly Rs.23,500.
• Platinum index peaked at $290/ton in August and has stabilized at $266-267/ton; management said prices remain on the higher side but stable, and may come down if the situation in China improves.
• Coal basket (FY 2026-2027): total requirement ~19 million tons, ~85% imported coking coal / ~15% indigenous; SAIL maintains ~30-35 days of coal inventory (plant and ports combined) and purchases no coke externally — fully produced in-house.
• Tasra Iron Ore Mines, Dhanbad production to start from January 2027 (FY 2026-2027), with coal-cost savings expected to flow into results from Q4 FY 2026-2027; once stabilized, expected to reduce dependence on imported coking coal.
• Coke rate deterioration in Q2 attributed to a typical rainy-season situation affecting raw material weight and blast furnace productivity; parameters showed good improvement in October, with further improvement targeted in Q3 and Q4 FY 2026-2027.

Iron ore output seen at 48-50 MT vs 56 MT target; 100 MT aspiration by FY 2030-31/32

• FY 2026-2027 iron ore production now expected at 48-50 MT against a 56 MT target; FY 2025-2026 closed at ~38 MT and H1 FY 2026-2027 delivered ~19.5-20 MT, with dry-season H2 output expected well above H1.
• 100 MT iron ore aspiration by FY 2030-31 or FY 2031-32 — or at least 80-85 MT if the full target is missed — driven by Raoghat, Goa, and ramp-ups at Bolani and Kalta (Odisha) plus Taldi; the plan explicitly excludes Chiria mines, which face clearance hurdles in a different state.
• Raoghat mine: MDO deployed and conducting interim mining under an EC clearance of 3 MT at a current run-rate of ~2 MT; main mining expected to take at least another one year, followed by a phased ramp-up — 3 → 4 → 6 → 9 → 14 MTPA — over the next 3-4 years. Goa mine planned to lift production from 4 MT to 10 MT (2.5x) via an MDO (period unspecified).
• Iron ore sales profit of Rs.388 crore in H1 FY 2026-2027 vs Rs.124 crore in H1 FY 2025-2026 (incremental Rs.265 crore YoY) on ~2.46 million tons sold; FY27 MoU target of 7 million tons and internal target of 10 million tons, with 7-8 million tons believed achievable at the current pace.
• Royalty structure: Schedule 5 royalty (150% of normal rate) applies only to already-renewed mines — Dali Rajra (Chhattisgarh) and the Jharkhand group; Schedule 6 applies to external iron ore sales in all cases — 150% of the normal royalty rate for fines and 250% for lump, with the normal rate at 15%.
• Key risks: issues at Jharkhand Group of Mines on pricing and permit fronts; the major chunk of Chhattisgarh volumes is expected from the new Raogad mine, which faces ground-level challenges being addressed. Beneficiation plants at Goa mines are planned (timeline unspecified) for subgrade fines and pelletization; the cost of processing 48-50% Fe ore was not quantified.

Rs.1,20,000 crore expansion to 35 MT; FPO timing left open

• Expansion from 20 million tons to 35 million tons across 4 units — IISCO, Bokaro, Bhilai and likely Rourkela — over the next 4 years (through FY 2030-2031), executed in a staggered manner: ISCO execution started with major packages ordered, Bokaro in advanced tendering, Bhilai tendering to begin within days/weeks, Rourkela DPR prepared for in-principle approval.
• Cumulative capex of Rs.1,20,000 crore over FY 2026-2027 to FY 2030-2031 (as clarified by the CMD); FY 2026-2027 capex guidance of Rs.15,000 crore with H1 spend of Rs.5,500 crore and Q3-Q4 outflow expected at Rs.9,000-10,000 crore; FY 2027-2028 guided in excess of Rs.20,000 crore (majority incremental from ISCO) and FY 2028-2029 indicated at ~Rs.25,000 crore. Management concurred with HSBC's suggestion that annual capex could exceed Rs.25,000 crore and potentially reach Rs.30,000-35,000 crore in the last two years of the window.
• Funding plan: internal accruals expected to contribute ~Rs.50,000 crore of the Rs.1,20,000 crore, with the balance raised as debt based on incremental requirements and execution progress; management is targeting Rs.10,000-12,000 crore of internal accruals per annum (specific FYs unspecified) — ~Rs.40,000-50,000 crore cumulatively over four years per management's own arithmetic (FY window unspecified) — with FPO and borrowings kept as "last options."
• FPO timing left open — analyst Amit Lahoti (Aditya Birla Institutional Equities) suggested deferring the raise ~2 years to the peak capex cycle, flagging single-digit return ratios and near-term stock overhang; CMD Ashok Panda took the point on record, said the FPO is planned but "the timing will decide when to go for that." No FPO timeline committed.
• Net debt of Rs.20,583 crore at 30 September 2026, down ~Rs.1,080 crore from the FY 2026-2027 opening level (Rs.1,146 crore down in Q2 from Rs.21,729 crore at 30 June 2026); debt-equity improved to 0.34. Management expects further reduction in Q3 and Q4 FY 2026-2027, while debt may increase from FY 2027-2028 onwards as expansion capex ramps up.
• Cost of borrowings at 6.34% in H1 FY 2026-2027 vs 6.42% in FY 2025-2026; with the repo rate up 25 bps, fresh loans and swaps in Q3-Q4 FY 2026-2027 will be somewhat costlier, though management expects them to remain competitive by industry standards.

EBITDA/t below internal target; wage provision due from Q4 FY27; pricing momentum post-monsoon

• H1 FY 2026-2027 EBITDA/tonne of Rs.9,561 against a Rs.10,000 internal target (target period unspecified); management indicated around Rs.9,061-9,600/t could be hit in Q3-Q4 FY 2026-2027 with further improvement expected, and is "trying to hit" Q4 FY 2025-2026 levels of ~Rs.11,000-12,000/t.
• Pricing momentum: Q2 FY 2026-2027 average NSR was Rs.54,400 for longs and Rs.57,000 for flats (blended Rs.55,500); in October 2026, long NSR is Rs.58,700 and flat NSR Rs.61,700 — around Rs.4,000 higher than the Q2 average. Management believes price levels will continue, with possible further upward movement as demand picks up; coal prices remaining very high flagged as a prevailing cost factor.
• Wage provision: management is planning for employee wage cost provisions becoming due from Q4 FY 2026-2027 (Jan-Mar 2027), but has not yet calculated any amount — the evaluation process has only just started.
• Labor code provision of Rs.198 crore in Q2 FY 2026-2027 (Rs.350 crore overall, period unspecified), booked under repair & maintenance within other expenses; figures are best estimates since the gazette notification does not yet specify the final industrial rate.
• Headcount at 48,000 at Q2 FY 2026-2027 end, down from ~50,000 at FY 2025-2026 close; expected around 46,000 by FY 2026-2027 year-end and 26,000 by end of FY 2030-31, driven by superannuation and BRS — normal separations of 3,000-4,000 per year plus ~1,000 through BRS (period unspecified).
• Inventory at 1.59 million tons (15 days) at 30 September 2026, down from 2.15 million tons at 30 June 2026; management targeting 1.2-1.3 million tons by year-end FY 2026-2027 and ~two weeks of inventory ongoing, noting it is difficult to go lower given 35 stockyards and multiple plant locations.
• Outlook: management cited the WSA Short Range Outlook (October 2026) projecting stable global steel demand in CY 2026 and ~1.7% growth in CY 2027, and India consumption growth of 8% in both CY 2026 and CY 2027; JPC data shows H1 FY 2026-2027 Indian production +3% and consumption +8% YoY, with India a net steel importer (~0.6 MT net imports in H1). CMD Ashok Panda cited agency forecasts for the Indian economy as "quite encouraging," with IMF, World Bank and RBI revising FY 2026-2027 GDP projections upwards to in excess of 7%; closing remarks were qualitative only, with no new numeric guidance.