The Volatile Journey of SAIL Shares

11 Jun 2022  Read 1296 Views

SAIL made the rounds of various media outlets recently, and not for the greatest reasons. The stock has been highly volatile over the last few weeks. While this volatility is what gave the stock its 15 minutes of fame in recent times, these ups and downs are very in trend with how SAIL’s shares work. For over two decades (23 years to be precise), SAIL stock prices have been the reason for multiple heart palpitations and bouts of anxiousness for many investors.

So here I am with the last 23 years of crests and troughs of the Steel Authority of India. It is one of those stocks that seem to have their free will as they fall and rise from nowhere.

Fundamental Analysis of SAIL

NSE: SAIL 

BSE: 500113

A “Maharatna” stock and one of the largest steel producers in India, the Steel Authority of India (SAIL) has always had a hide-n-seek relationship with the Bulls and the Bears of the Dalal Street since its debut. 

The company started its operations with the installation of its alloy steel plant at Durgapur in W. Bengal with Japanese assistance, boasting of an installed capacity of 1 lakh TPA of ingot steel. The plant had the capacity to produce 2.60 TPA of liquid steel. The “Maharatna” was started to meet the country's strategic needs in defence, space, and nuclear energy.

Talking about the strengths, SAIL has registered a healthy profit growth of 104.08% over the past 3 years. The company boasts of a good PEG ratio, i.e. 0.03. 

With promoters holding 65% shareholding of the company, SAIL is known for a strong degree of Operating leverage, with a 5.70 Average Operating leverage.

SAIL has an efficient cash conversion cycle of 57.13 days and good cash flow management, with its CFO/PAT standing at 9.10. 

Most importantly, the company has been able to cut down its debt by 16,450.38 Cr.

Here come the weaknesses. 

While the results of the quarter ending in March 2022 were disappointing, SAIL has already been struggling with poor ROE (6.26%) over the past 3 years.

And the company still has an unpaid debt of 37,676.67 Cr. 

The Sweet and Bitter Relationship of SAIL with the Stock Exchange

Between 1st January 1999 and 29th May 2022, SAIL saw a 1,135.83 per cent increase in its share price, from INR 6 to INR 74.65 on the last working day of the stock exchange.

During these 23 years and 5 months, the stock saw unexpected highs and unwanted lows. Let’s revisit some major milestones in this “Maharatna’s” journey.

SAIL Share Price during 1999-2002

Can you believe that the lowest SAIL share price in 2002 (4.7) was lower than its open price in 1999 (5.5)? But, something more unbelievable is the stock also hit its highest (13.3) in 2002, which was around 30 per cent lower than its highest price in 2002. But, this is the year when SAIL learned to sail through turbulent times.

So, as they say, “coming events cast their shadows before them”. SAIL, from 1999 to 2002 had indicated that it would always keep its takers on tenterhooks. 

And the trend is continued even after over two decades.    

The Extreme Volatility in 2003

2003 was the most volatile year for SAIL price as the stock saw volatility of over 800% between Jan 2003 – December 2003. 

The stock opened at INR 10.3 at the start of the year and closed at INR 51.1, registering a growth of around 500 percent in just one year. But, the stock made a high and low of 61.4 and 8.7, respectively. Now, what would you call this?

The Dream Run of 2007—2010

These 4 years were a glorious period for the investors of SAIL, as the stock not just made unprecedented highs but also sustained them. 

On the fateful morning of 1st January 2007, when the stock opened at INR 89, nobody would have thought that it would close the year at INR 284.35, an enormous 219 per cent growth in just a year with a lifetime high of 292.5 in the very year.

The dream run continued for another three years, though the stock didn’t leave its habit of giving almost a heart attack to investors by making steep lows. During these 4 years, the stock made a high and low of 292.5 (in Dec. 2007) and 62(in Oct. 2008). But then it manages to touch the high INR 258 within the next 13 months.        

SAIL Loses Track 2012 Onwards

The major turbulence for SAIL begins at the end of the year 2011 which is continuing still. After making a low of 73 in Dec. 2011, the stock failed to touch even 150 in the following 10 years. But, still, one thing didn’t change, i.e. the difference between the highs and lows. 

SAIL price shows average volatility of around 100% between 2012 and 2022. The period 2019-20 was the worst period for the stock when it made its lowest (20.15) in the last 15 years, thanks to the COVID wave that bothered the stock exchanges across the globe.

But, once again, the SAIL price manages to cross the 150 mark in 2021. 

The Expectations from 2022

Amid the global crisis, especially the Russia-Ukraine, the stock once again took a beating in April and May, witnessing over a 30 per cent decline from its April high. Like other metal stocks, SAIL also bears the brunt of rising operational costs and the economic crisis in China. And that’s why it has been on Bear’s radar for over the last one and a half months, with most analysts advising to stay away from the support.

But, the good thing is the stock has been able to defend its major support of 70 and shown a positive upward movement. Also, the market sentiment has improved over the past two weeks, with the Nifty 50 holding the vital level of 16600 on 30th May.   

So, what do you think now? Has the time arrived for taking fresh positions in SAIL?

You never know it with SAIL. And, for those holding this at higher prices, let me cheer you up with last year’s statistics. In January 2021, the SAIL price was 55.3, that increased by almost 300% within 5 months, i.e. 151 in May 2021.

So, what do you think now? Opening the house for the speculations! 

Share your views in the comment box.

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About the Author: Pankaj Sharma | 4 Post(s)

A passionate writer with keen interest in stock market. 

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