SAIL: Reduction in costs key to further gains

As volumes improve and operating leverage sets in, lower costs are necessary to boost earnings

After underperforming its larger peers in the past one-three years, the stock price of Steel Authority of India (SAIL) has been playing catch-up in the past few months; it is up 46 per cent since October. Among key reasons is the improvement in SAIL’s operating performance and a favourable business environment. The latest news regarding SAIL signing a non-binding agreement with ArcelorMittal, the world’s largest steelmaker, to set up an automotive steel joint venture, has also helped, though gains therefrom will accrue in the longer run. But, further gains for the stock will depend on how successful the company is