Maharatna steel stock jumps 3% after it plans to increase production capacity to 35.65 MTPA by 2031

Maharatna Steel’s stock saw a rise following the company’s announcement of plans to begin operations at the Tasra coking coal mine in 2026. Additionally, the company aims to boost its steel production capacity to 35.65 MTPA by 2031. These strategic moves are expected to enhance production capabilities and strengthen the company’s position in the steel industry.

Price Movement

During Monday’s trading session, shares of Steel Authority of India Ltd jumped to an intraday peak of Rs.118.63 each, reflecting a 3 percent increase from the prior closing price of Rs.115.30 per share. However, the stock retreated later and is currently trading at Rs.117.20 apiece. Over the past five years, the stock has delivered over 460 percent returns. 

What happened 

Steel Authority of India Limited (SAIL) is expected to begin operations at its 4 million tonnes per annum (MTPA) Tasra coking coal mine in Jharkhand by the second half of 2026. Currently, SAIL sources 16 percent of its coking coal requirements domestically, with plans to increase this proportion, as stated by a senior company official. 

In the financial year 2023-24, SAIL consumed 19.37 million tonnes (mt) of coking coal, of which 2.45 mt was sourced locally. Once fully operational, the Tasra mine will produce 4 MTPA of coking coal. India imported 58 mt of coking coal in FY24, with Australia being the largest supplier. The new mine will help SAIL meet its increasing coking coal demand, supporting its goal to ramp up crude steel production from 19.10 MTPA in FY24 to 35.65 MTPA by 2031.

Also read: Steel stock crashes over 5% after brokerages cuts its target price by 13%

Recent Developments

State-owned SAIL plans to more than double the capacity of its Rourkela Steel Plant (RSP) to around 9 million tonnes per annum with an investment of Rs. 30,000 crore. This expansion will boost supplies to key sectors such as defence, oil & gas, and automobiles. Once completed, RSP will contribute 25 percent to SAIL’s 35 MTPA production target by 2030. The expansion, covering 1,200 acres, will significantly enhance the plant’s output.

Earnings Report

According to its recent financial updates, SAIL Ltd reported remarkable consolidated revenue of Rs.24,490 crores in Q3 FY25, marking a 5 percent increase from Rs.23,349 crores in Q3 FY24. However, the company saw a 66 percent decline in net profit to Rs.142 crores, compared to Rs.423 crores in the same period.

Ratio Analysis

The company has a Return on Capital Employed (ROCE) of 6.57 percent and a Return on Equity (ROE) of 5.48 percent. Its Price-to-Earnings (P/E) ratio stands at 14.98, lower than the industry average of 33.51. Furthermore, the company maintains a current ratio of 1.8, a debt-to-equity ratio of 0.72, and an Earnings Per Share (EPS) of Rs.7.07. 

Written by – Siddesh S Raskar

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