> ## Content Index > Fetch the complete content index at: https://www.moatmarginresearch.com/llms.txt > Use this file to discover other available public pages before exploring further. # SAIL Q2: ₹1,773.73 Crore Profit, and the Notes Behind It - URL: https://www.moatmarginresearch.com/sail-q2-profit-jump-board-composition-iron-ore-fines/ - Published: 2026-10-28T02:50:26.000Z - Updated: 2026-10-28T02:50:26.000Z - Description: SAIL's standalone Q2 profit was ₹1,773.73 crore against ₹426.79 crore. Its auditors flag the board, and the notes carry ₹3,083.66 crore of fines at one mine. - Author: A K Karthikeyan - Tags: Moat Insights **Steel Authority of India (SAIL) reported a standalone profit after tax of ₹1,773.73 crore for the September 2026 quarter, against ₹426.79 crore a year earlier. The same filing carries its auditors' remark that the board lacks the required number of independent directors and has no woman director, and a note on ₹3,083.66 crore of iron-ore fines at one mine, where dispatch permissions and sale clearances are still awaited. The profit is real in the accounts. What is worth reading is how much of the filing rests on judgement.** ## The idea in one sentence In an integrated steelmaker, profit is a thin gap between very large lines, so a quarter's headline depends on the lines that moved and on the notes that say how firm they are. ## The fact that breaks the assumption A profit of ₹1,773.73 crore against ₹426.79 crore reads like a turnaround. The filing says something quieter. The previous quarter's profit was already ₹1,636.00 crore, so Q2 FY27 is ₹137.73 crore above Q1 (our arithmetic) (\[R\], PDF p.5). On the governance side: in their limited review report on the (unaudited) standalone results, the joint auditors write under "Other Matter" that the board "does not have the requisite number of Independent Directors and Non-Executive Directors on the Board" and that "the company does not have a Woman Director on its Board". They say the board, and committees including the Audit Committee and the Nomination and Remuneration Committee, "was not in compliance" with Sections 149, 177 and 178 of the Companies Act and Regulations 17, 18 and 19 of the SEBI listing rules. The conclusion on the results is "not modified" (\[R\], PDF pp.3-4; the consolidated report repeats it, PDF pp.16-18). So this is not a qualified opinion. It is a stated non-compliance sitting next to a clean conclusion. Note 1 to the results says the Audit Committee consists of "one functional Director, one government nominated Director and one independent Director, pending appointment of independent Directors" (\[R\], PDF p.9). ## One concrete thing, followed: the fines at Gua Note 4 follows one pile of material: sub-grade iron-ore fines generated at SAIL's captive mines. They carried no value in its books until the year ended 31 March 2019, because a 2012 government notification barred captive miners from selling them. A government order of 16 September 2019 allowed sale, and SAIL recognised the fines as by-product inventory at 31 March 2020\. As the pile built up over many years, it valued them on the average selling price of similar fines over the last 36 months, as declared by the Indian Bureau of Mines, adjusted for royalty and other selling costs (\[R\], PDF p.9). At 30 September 2026, in Jharkhand, the pile at the Gua mines was 31.83 million tonnes, valued at ₹3,083.66 crore (31 March 2026: 32.13 million tonnes, ₹3,112.01 crore). That is about ₹969 a tonne (our arithmetic). Evacuation from the Duarguiburu lease began in FY 2023-24 for captive use; for the Topilore lease, "the necessary permissions for dispatch is awaited". In the half year, 292,645 tonnes were dispatched from Gua for captive consumption (506,493 tonnes in FY 2025-26). On sale, the note says "the delay is procedural and the management expects to receive the clearances in due course" (\[R\], PDF p.9). The 292,645 tonnes dispatched is about 0.9% of the Gua pile (our arithmetic). The company-wide figure is larger: 37.63 million tonnes of sub-grade fines valued at ₹3,633.31 crore, of which 35.36 million tonnes (₹3,423.50 crore) are classed as non-current. Adding tailings, slag scrap and manganese slag, the by-product stocks in the note total ₹4,639.18 crore (our arithmetic) (\[R\], PDF p.10). SAIL makes a claim about this pile: "there is significant market demand for sub-grade fines and the recent sales price trends are indicative of considerable margins over and above the carrying value of such inventories." It has sold such fines in Odisha. It says no adjustment to the carrying value is needed (\[R\], PDF pp.9-10). That is management's view. ## The mechanism: how the profit formed | Standalone, ₹ crore unless stated | Q2 FY27 | Q2 FY26 | Q1 FY27 | | --------------------------------------- | --------- | --------- | --------- | | Revenue from operations | 31,997.51 | 26,703.94 | 26,245.64 | | Sales volume (million tonnes) | 5.16 | 4.91 | 4.16 | | Total expenses | 29,909.60 | 26,115.64 | 24,146.35 | | Profit before exceptional items and tax | 2,429.08 | 891.33 | 2,302.80 | | Exceptional items (charge) | 72.69 | 338.44 | 144.01 | | Profit before tax | 2,356.39 | 552.89 | 2,158.79 | | Profit after tax | 1,773.73 | 426.79 | 1,636.00 | | EBITDA (company-defined) | 4,561 | 2,829 | 4,356 | | Operating margin (company-defined, %) | 14.25 | 10.59 | 16.60 | (\[R\], PDF pp.5, 13, 36\. Sales volume and EBITDA are from the press release; the operating margin is the company's ratio of profit before depreciation, interest, tax and exceptional items to revenue from operations.) Revenue rose ₹5,293.57 crore, or 19.8%, while total expenses rose ₹3,793.96 crore, or 14.5% (our arithmetic). Profit before exceptional items and tax therefore rose ₹1,537.75 crore (our arithmetic). Other income was ₹341.17 crore against ₹303.03 crore. The exceptional charge also fell by ₹265.75 crore (our arithmetic): the half-year charge of ₹216.70 crore is for voluntary retirement compensation, while the year-ago ₹338.44 crore was for the increase in the gratuity limit from ₹20 lakh to ₹25 lakh (\[R\], PDF pp.5, 10-11). What does the company say drove it? The press release says "Boosted by growth in sales volume and steps taken towards cost optimization". Sales volume was 5.16 million tonnes against 4.91, which it calls 5% growth. Dr A K Panda, CMD, SAIL, is quoted in it: "we achieved a 24% QoQ growth in sales volume during Q2", supported by "robust production, improvement in usage of raw material, reduction in steel inventory" (\[R\], PDF pp.36-37). Volume alone does not explain the revenue. Tonnes rose about 5% while revenue rose 19.8%. Revenue divided by sales volume is about ₹62,000 a tonne against about ₹54,400 a year earlier, up about 14% (our arithmetic; revenue includes more than steel sales, so this is a rough proxy, not a price). The filing gives no steel price or cost per tonne, so what drove that gap is not in it. The cost lines show where the spread came from. Cost of materials consumed rose to ₹13,887.75 crore from ₹10,373.41 crore. Purchases of stock-in-trade fell to ₹417.65 crore from ₹1,652.09 crore. Employee benefits expense was ₹2,861.63 crore against ₹2,938.76 crore. Depreciation rose to ₹1,608.56 crore from ₹1,453.02 crore, and finance costs to ₹523.40 crore from ₹484.28 crore (\[R\], PDF p.5). Our reading: the plant-bound lines (people, depreciation, interest) moved little while revenue moved a lot, which is how a thin margin can widen. The filing does not itself make that argument. Stock movement matters too. The line for changes in inventories of finished goods, work-in-progress and by-products was a credit of ₹2,249.74 crore in Q1 and a charge of ₹2,459.85 crore in Q2, against ₹1,347.33 crore a year earlier (\[R\], PDF p.5). Our reading of the signs: Q1 built stock and Q2 sold it down. The press release's volumes point the same way: crude steel production of 4.85 million tonnes against sales of 5.16 million (the two are not identical products, so this is a rough guide). By plant, the segment result (before finance costs and exceptional items) rose most at Bokaro Steel Plant, to ₹849.07 crore from ₹170.58 crore (our arithmetic); Bhilai was ₹963.71 crore against ₹505.37 crore (\[R\], PDF p.6). Then the notes. Some sales to government agencies are invoiced "at provisional prices, till a final price is subsequently agreed". Those sales were ₹2,712.55 crore in the quarter (₹2,505.40 crore a year earlier), about 8.5% of Q2 revenue (our arithmetic), and ₹4,775.53 crore in the half year. The half-year and cumulative figures include ₹309.03 crore "provided on account of downward revision of rail price for the Financial Year 2024-25", based on a recommendation of the Office of the Chief Advisor-Cost, Ministry of Finance, dated 29 June 2026\. That one provision equals about 6.8% of half-year profit before tax (our arithmetic). The filing does not say which quarter bore it. The auditors list the provisional-price sales, the ₹216.70 crore voluntary-retirement charge and the 2024 suspension note as "Emphasis of Matter" items, again with the conclusion not modified (\[R\], PDF pp.3, 9). ## Moat and margin - **Moat:** the fines come from SAIL's "captive mines", and management says it plans a beneficiation plant that would consume them. Our reading: owning the mines is the cost-side advantage, and the pile is its unrealised part. MoatSCORE (provisional, first-pass) 5.18 on our Moat Screener (\[MS\]); see also our [moat page](https://www.moatmarginresearch.com/steel-authority-moat/) (\[MP\]). - **Margin:** the company-defined operating margin was 14.25%, up from 10.59% a year earlier and down from 16.60% in Q1 (\[R\], PDF p.13). - **Governance:** tracked as a risk, never scored. ## Where this breaks - **The year-on-year comparison flatters.** The year-ago quarter carried a ₹338.44 crore exceptional charge and a ₹891.33 crore pre-exceptional profit. Against Q1 FY27 the quarter is ₹137.73 crore higher on profit after tax, and the operating margin and the revenue-per-tonne proxy (about ₹63,100 in Q1, our arithmetic) both slipped. - **One quarter is one quarter.** Half-year sales volume was 9.33 million tonnes against 9.46 million a year earlier, even as half-year profit after tax rose to ₹3,409.73 crore from ₹1,112.27 crore (\[R\], PDF p.36). Q2's 5.16 million tonnes followed 4.16 million in Q1\. This is one quarter and one half. - **Inventory is still higher than in March.** Current inventories were ₹25,483.69 crore on 30 September against ₹23,456.08 crore on 31 March (\[R\], PDF p.8), even with the "reduction in steel inventory" the CMD cites. - **Provisional prices are revised when a final price is agreed.** The ₹309.03 crore revision was downward and was for FY 2024-25\. The filing does not say what the final prices for the ₹23,456.97 crore cumulative figure will be, or whether further revisions are expected. - **The fines are valued, not sold.** At ₹3,083.66 crore (Gua) and ₹3,633.31 crore (all fines), the pile is about 5% and 6% of net worth of ₹60,329.37 crore (our arithmetic; net worth from \[R\], PDF p.12). SAIL says no write-down is needed. The valuation rests on a 36-month price average and management's judgement of "considerable margins". The filing does not say what the pile fetches when it is sold. - **The board.** The auditors say committees including the Audit Committee did not comply with the law. The Audit Committee that reviewed these results had one independent director. The filing gives no date for appointments. - **An old matter.** Note 7 records that two directors and some below-board officials were suspended in January 2024 over certain policy and pricing decisions, and that the suspensions were revoked on 28 June 2024\. Management's assessment: "not likely to have a material impact" (\[R\], PDF p.11). - **Cash is not profit.** In the half year SAIL spent ₹5,446.28 crore on property, plant and equipment, against ₹4,021.39 crore a year earlier, and generated ₹8,447.69 crore of cash from operations (\[R\], PDF p.7). ## Why it costs the reader something A reader who takes one quarter's profit at face value is using a number with three soft parts: invoices still at provisional prices, a valued pile that needs clearances, and a year-ago base that carried a large exceptional charge. None of this says the profit is wrong. It says the ₹1,346.94 crore rise (our arithmetic) is not one clean number. The governance remark is a compliance fact the auditors chose to print; the filing does not say what it costs. ## What to watch 1. Any appointment of independent or woman directors, and the next auditors' report. 2. Whether the Topilore dispatch permissions and sale clearances come through, and what the fines sell for. 3. How the provisional-price sales settle against the ₹23,456.97 crore cumulative figure. ## Where we end up The profit is ₹1,773.73 crore against ₹426.79 crore. The pile at Gua is ₹3,083.66 crore on the books, 292,645 tonnes moved in six months for captive use, and a note that calls the delay procedural. Whether that turns into cash is still a judgement. ## Sources - **\[R\]** [SAIL, Q2 and H1 FY27 results filing](https://nsearchives.nseindia.com/corporate/SAIL%5F27102026203833%5Ffinres.pdf) (NSE), 27 Oct 2026 - **\[SM\]** [Shyam Metalics' ₹50,000 crore Maharashtra steel MoU](https://www.moatmarginresearch.com/shyam-metalics-50000-crore-maharashtra-steel-mou/), Moat & Margin, 3 Oct 2026 (an earlier piece on a steel company's capex and integration) - **\[MP\]** [Steel Authority moat page](https://www.moatmarginresearch.com/steel-authority-moat/) - **\[MS\]** [Moat & Margin, Moat Screener](https://www.moatmarginresearch.com/moat-screener/) --- > Educational research, not investment advice. Every figure above is drawn from Steel Authority of India's own filing, read from the primary document on 28 October 2026; derived figures are our arithmetic, labelled as such. MoatSCORE (provisional, first-pass) 5.18 read live from the Moat Screener on 28 October 2026\. No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.