When I look at Steel Authority of India Limited (SAIL) stock with 2 to 3 years investment horizon, it appears to be very attractive at current price (CMP as on 25th Sep 2015: Rs.68). Just consider the following points.
1. SAIL steel capacity is expected to reach around 21.5 million tonnes by March 2017 from capacity of around 13.3 million tonnes as on March 2012. As on March 2014, it had crude steel production capacity of approx. 16 million tonnes.
2. Considering the modest replacement cost of 65000 per tonne, the replacement cost for entire company comes to around Rs. 1.4 lakh crores (1,40,000 crores) against the current market value of around Rs. 29,000 crores.
3. Considering the net debt level of Rs. 45000 crores by March 2017, if one purchase the stock today at roughly 70 bucks, he will be paying an enterprise value of 74000 crores (almost half of SAIL's March 2017 replacement cost).