Steel Authority Of India Ltd. is Rated Hold

Current Rating and Its Significance

MarketsMOJO’s 'Hold' rating for Steel Authority Of India Ltd. indicates a neutral stance on the stock, suggesting that investors should maintain their existing positions rather than aggressively buying or selling. This rating reflects a balanced view of the company’s prospects, where certain strengths are offset by notable challenges. The rating was revised from 'Sell' to 'Hold' on 23 December 2025, with the Mojo Score improving by 17 points to 65.0, signalling a more favourable outlook compared to the previous assessment.

Here’s How the Stock Looks Today

As of 12 February 2026, Steel Authority Of India Ltd. is classified as a midcap company operating within the ferrous metals sector. The stock has demonstrated a positive price trajectory over recent months, with returns of +8.31% over the past month and a robust +52.79% over the last year. Year-to-date, the stock has gained +10.04%, reflecting renewed investor interest and improving market sentiment.

Quality Assessment

The company’s quality grade is assessed as average. While Steel Authority Of India Ltd. maintains a significant market presence, its operational performance reveals some concerns. The latest quarterly results show a decline in profitability, with profit before tax (excluding other income) falling by 58.5% to ₹305.25 crores and net profit after tax dropping by 47.0% to ₹374.03 crores compared to the previous four-quarter average. Additionally, non-operating income constitutes a substantial 36.37% of profit before tax, indicating reliance on income sources outside core operations. These factors temper the overall quality outlook.

Valuation Perspective

Valuation metrics for Steel Authority Of India Ltd. are currently attractive. The company’s return on capital employed (ROCE) stands at 5.5%, which, while modest, is supported by an enterprise value to capital employed ratio of 1.1. This suggests the stock is trading at a discount relative to its peers’ historical valuations. Despite the subdued profit growth of 6.2% over the past year, the stock’s price appreciation of 61.76% has resulted in a price-to-earnings-to-growth (PEG) ratio of 3.5, signalling that the market may be pricing in future growth potential cautiously.

Financial Trend Analysis

The financial trend for Steel Authority Of India Ltd. is characterised as flat. The company faces challenges in long-term growth, with operating profit declining at an annualised rate of -10.67% over the past five years. Furthermore, the firm’s debt servicing capacity is limited, evidenced by a high Debt to EBITDA ratio of 2.69 times. This elevated leverage ratio raises concerns about financial flexibility and risk, especially in a capital-intensive sector like ferrous metals.

Technical Outlook

From a technical standpoint, the stock exhibits a bullish trend. Recent price movements show steady gains, with a 3-month return of +12.69% and a 6-month return of +32.28%. The stock’s day change as of 12 February 2026 was a slight decline of -0.22%, which is negligible in the context of its broader upward momentum. This technical strength supports the 'Hold' rating by suggesting that while the stock is not a strong buy, it remains well-positioned within its current trading range.

Institutional Interest and Market Position

Institutional investors hold a significant stake in Steel Authority Of India Ltd., with 22.38% ownership as of the latest data. This level of institutional holding is indicative of confidence from sophisticated market participants who typically conduct thorough fundamental analysis. Notably, institutional holdings have increased by 0.52% over the previous quarter, signalling a modest but positive shift in sentiment among large investors.

What the Hold Rating Means for Investors

For investors, the 'Hold' rating on Steel Authority Of India Ltd. suggests a cautious approach. The stock’s attractive valuation and positive technical signals offer some encouragement, but the company’s flat financial trend and average quality metrics warrant prudence. Investors currently holding the stock may consider maintaining their positions to benefit from potential upside, while new investors might wait for clearer signs of sustained operational improvement before committing fresh capital.

Sector and Market Context

Operating within the ferrous metals sector, Steel Authority Of India Ltd. faces cyclical industry dynamics influenced by global steel demand, raw material costs, and regulatory factors. The company’s midcap status places it in a competitive position, but also exposes it to volatility relative to larger, more diversified peers. The current market environment, with rising commodity prices and infrastructure spending, could provide tailwinds, but the company’s leverage and profit volatility remain key risks to monitor.

Summary

In summary, Steel Authority Of India Ltd.’s 'Hold' rating by MarketsMOJO, updated on 23 December 2025, reflects a balanced view of the company’s prospects as of 12 February 2026. While valuation and technical factors are supportive, challenges in financial trends and operational quality temper enthusiasm. Investors should weigh these factors carefully, recognising that the stock currently offers moderate potential with commensurate risks.

Looking Ahead

Going forward, key indicators to watch include improvements in operating profit growth, debt reduction, and sustained technical momentum. Any meaningful progress in these areas could prompt a reassessment of the rating. Until then, the 'Hold' stance remains appropriate, signalling neither a strong buy opportunity nor a sell signal, but rather a call for measured observation and selective engagement.

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