Why did the stock of SAIL rally so sharply after the quarterly results?

SAIL reported stellar results in the Sep-21 quarter resulting in the SAIL stock shooting up to the Rs.130 levels. It reported a 10-fold surge in net profits to Rs.4,304 crore for the September quarter. Even on a sequential basis, the PAT was up 12% in the quarter. SAIL had also reported 48% spike in standalone revenues and this was supported by the growth in volumes as well as robust steel prices amidst rising demand.

EBITDA margins at 26.2% is extremely attractive by steel industry standards. However, the EBITDA at Rs.16,395 per tonne was much lower than what the analysts had estimated at Rs.18,000 per tonne. During the Sep-21 quarter, ace investor Rakesh Jhunjhunwala had also purchased a big chunk of SAIL shares and the stock has rallied very smartly since then.