SAIL operating margin falls to 3.09% as costs outpace revenue
Revenue fell 14.82% sequentially while expenses rose 1.49%, driving a 15.57-point margin drop even as year-on-year net profit rose 120.80%.
Filed 24 Jul 2026, 18:46 IST · after market close · Steel Authority of India Ltd (SAIL)
Key takeaways
- Consolidated operating margin fell 15.57 percentage points sequentially to 3.09% as revenue declined 14.82% while expenses rose 1.49%.
- Net profit rose 120.80% year on year to Rs 1,644.05, even as operating profit fell 72.33%, with lower interest costs and other income supporting reported profit.
- SAIL's 3.09% operating margin was 10.47 percentage points below the 13.56% median for 12 reported Commodities peers.
Price around the results
Revenue fell sharply while costs moved higher
SAIL's consolidated revenue fell 14.82% sequentially, while expenses increased 1.49%, causing operating profit to drop 85.91%. Year on year, revenue was almost flat at +1.25%, but expenses grew 10.62%, narrowing operating margin by 8.21 percentage points. The result was a 3.09% margin, well below the 13.56% median among 12 Commodities peers and the third-lowest position in that group.
Net profit was lifted outside operations
Net profit increased 120.80% year on year even though operating profit declined 72.33%. Interest expense fell 17.08% year on year, while other income accounted for 9.51% of profit before tax, so reported earnings were not driven by operating improvement. Sequentially, the tax rate fell 3.59 percentage points, which cushioned the decline in net profit as profit before tax fell 6.91%.
Margin recovery from Q4FY26 was reversed
The operating margin had recovered to 18.66% in Q4FY26 after moving between 11.30% and 15.21% in the first three quarters of FY26. Q1FY27 therefore marked a sharp reversal rather than another incremental decline, with the margin down 15.57 percentage points sequentially. The year-on-year comparison is more revealing for the quarter: revenue grew only 1.25% while expenses rose 10.62%.
Presentation points to a mixed macro backdrop
Management said India was likely to remain among the fastest-growing major economies despite lower projected future-year growth of 6.4% to 7.2%. The presentation said the prevailing Middle East situation was the major factor affecting 2026 global growth projections, while also noting that inflation had affected India's post-COVID recovery. These comments provide macro context, but do not change the quarter's weak operating performance.
No immediate market reaction after the filing
The consolidated results were filed after market close, so there was no current-session stock reaction to assess. After the last eight results, the stock rose three times and fell five times, with a median absolute move of 2.49%. The historical pattern therefore leans negative, but the current response remains pending.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹26,246 cr | ₹30,813 cr | -14.82% | +1.25% |
| Other income | ₹206 cr | ₹352 cr | -41.55% | +26.77% |
| Expenses | ₹25,435 cr | ₹25,062 cr | +1.49% | +10.62% |
| Operating profit | ₹810 cr | ₹5,751 cr | -85.91% | -72.33% |
| Operating margin (%) | 3.09% | 18.66% | — | — |
| Interest | ₹493 cr | ₹532 cr | -7.33% | -17.08% |
| Depreciation | ₹1,560 cr | ₹1,577 cr | -1.07% | +8.24% |
| Profit before tax | ₹2,161 cr | ₹2,321 cr | -6.91% | +141.52% |
| Tax | ₹543 cr | ₹666 cr | -18.56% | +143.08% |
| Net profit | ₹1,644 cr | ₹1,835 cr | -10.43% | +120.80% |
| EPS (₹) | ₹3.98 | ₹4.44 | -10.36% | +121.11% |
Operating margin of 3.09% compares with a Commodities sector median of 13.56% across 12 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- India is likely to remain among the fastest-growing major economies despite lower future-year growth projections.
- IMF increased its 2026 global growth projection, while 2027 estimates are marginally better than 2026.
Problems & risks
- India’s post-COVID economic recovery was affected by inflation.
- The prevailing Middle East scenario is identified as the major factor affecting 2026 global growth projections.
What to watch
- Whether operating margin recovers from 3.09% after the 15.57-percentage-point sequential fall.
- Whether expense growth moves below the +10.62% year-on-year rate recorded against +1.25% revenue growth.
- Whether other income remains near 9.51% of profit before tax or operating earnings drive more of reported profit.