SAIL's operating margin rebounds, but still trails commodities peers
Revenue grew faster than expenses, ending a three-quarter margin decline, while lower interest costs supported profit growth despite a higher tax rate.
Filed 15 May 2026, 19:42 IST · after market close · Steel Authority of India Ltd (SAIL)
Key takeaways
- Consolidated operating margin rebounded 5.93 percentage points QoQ to 14.31% as revenue grew 12.58% while expenses rose 5.29%.
- Consolidated net profit increased 46.72% YoY to Rs 1,835.47 cr despite a 2.12 percentage-point rise in the tax rate, with other income contributing 8.09% of pre-tax profit.
- SAIL's 14.31% operating margin remained 4.46 percentage points below the 18.77% median for 51 reported commodities peers.
Price around the results
Q4 revenue growth restored operating leverage
Consolidated revenue rose 12.58% QoQ and 5.11% YoY, while expenses grew at a slower 5.29% and 2.22%, respectively. That spread lifted operating margin by 5.93 percentage points QoQ and 2.43 percentage points YoY. The company reported Q4 sales volume of 5.1 million tonnes, giving the revenue recovery a volume marker.
Lower interest costs aided profit, but tax rose
Interest expense fell 2.78% QoQ and 19.93% YoY, helping pre-tax profit rise 421.47% sequentially and 50.96% year on year. The tax rate increased 4.59 percentage points QoQ and 2.12 percentage points YoY, so the net-profit increase was not driven by a lower tax burden. Other income accounted for 8.09% of pre-tax profit, meaning reported earnings were primarily operating-led rather than dependent on non-operating income.
Margin recovery breaks a three-quarter decline
Operating margin had fallen sequentially from 11.88% in Q4FY25 to 10.68% in Q1FY26, 9.47% in Q2FY26 and 8.38% in Q3FY26 before recovering to 14.31% in Q4FY26. Despite that rebound, SAIL remained below the 18.77% median margin of 51 commodities peers that had reported the quarter. Its peer comparison was 16 places from the bottom.
Presentation flags macro risks and workforce reduction
The company's presentation cited the IMF's projections of global growth at 3.3% for 2026 and 3.2% for 2027, while identifying the Middle East situation as a major factor affecting the 2026 outlook. It also reported India's First Advance Estimate of FY26 GDP growth at 7.4% and said inflation had affected the post-COVID recovery. The presentation said manpower declined by 860 during the quarter.
Initial stock response was ordinary for SAIL
The stock rose 0.17% on the result-day session and gained 3.08% after five sessions, before falling 3.33% after 15 sessions and 12.54% after 30 sessions. Across eight prior result reactions, SAIL rose twice and fell six times, with a median absolute move of 3.04%; the five-session move was therefore close to its usual magnitude, though the initial direction differed from its historical bias.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹30,813 cr | ₹27,371 cr | +12.58% | +5.11% |
| Other income | ₹202 cr | ₹248 cr | -18.49% | -44.06% |
| Expenses | ₹26,405 cr | ₹25,077 cr | +5.29% | +2.22% |
| Operating profit | ₹4,409 cr | ₹2,294 cr | +92.16% | +26.55% |
| Operating margin (%) | 14.31% | 8.38% | — | — |
| Interest | ₹532 cr | ₹547 cr | -2.78% | -19.93% |
| Depreciation | ₹1,577 cr | ₹1,516 cr | +4.07% | +3.50% |
| Profit before tax | ₹2,502 cr | ₹480 cr | +421.47% | +50.96% |
| Tax | ₹666 cr | ₹106 cr | +530.22% | +64.03% |
| Net profit | ₹1,835 cr | ₹374 cr | +390.73% | +46.72% |
| EPS (₹) | ₹4.44 | ₹0.91 | +387.91% | +46.53% |
Operating margin of 14.31% compares with a Commodities sector median of 18.77% across 51 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.17% | +0.14% |
| Next session | +3.46% | — |
| 5 sessions | +3.08% | +1.44% |
| 15 sessions | -3.33% | — |
| 30 sessions | -12.54% | — |
Volume on the results session was 1.42× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Sales in Q4 FY26 were 5.1 million tonnes.
- Manpower declined by 860 during the quarter.
Guidance & outlook
- The IMF projected global economic growth at 3.3% for 2026 and 3.2% for 2027.
- India's First Advance Estimate for FY26 GDP growth was 7.4%.
Problems & risks
- The document cited inflation as a factor that affected India's post-COVID economic recovery.
- The document said the Middle East situation was the major factor affecting 2026 global growth projections.
What to watch
- Whether operating margin holds above 14.31% after the three-quarter sequential decline.
- Whether revenue growth remains ahead of expense growth, following Q4's 12.58% versus 5.29% spread.
- Whether quarterly sales volume remains near the reported 5.1 million tonnes.