JSPL Q3 Results: Expects Iron Ore Inventory, Higher Steel Prices To Aid Stronger Growth

Jindal Steel & Power Ltd. reported better-than-expected earnings in the quarter ended December as demand continues to rebound. The steelmaker now expects growth to be stronger.

Higher realisations and lower raw material costs, as it used Sarda mine's iron ore inventory, underpinned the performance in the third quarter. VR Sharma, managing director at JSPL, said the raw material cost benefit will continue in the ongoing quarter as the inventory from Sarda will exhaust in the first quarter of the next fiscal.

The company also stands to gain Rs 1,000 a tonne from the end-use transportation policy of the railways to prioritise domestic users, he said.

Sharma, however, expects iron ore prices to rise because of lower production, aiding steel prices besides buoyant in China.

To ease iron ore shortage, he suggested the government could allow private miners to produce 25-30% above limit for which they have environment clearance, scrapping the policy of iron ore mining on pro-rata basis, and asking state run-producer NMDC Ltd. to ramp up its production by more than 50%.

Q3 Snapshot

JSPL's operating profit jumped 2.5 times over a year earlier to Rs 4,252.4 crore in the quarter ended December. That beat Rs 3,347 crore, the average of estimates compiled by Bloomberg. Net profit also beat forecasts.

• Revenue rose 39.9% to Rs 10533.5 crore (estimate: Rs 9,943 crore).
• Ebitda jumped 170% to Rs 4,252.4 (estimate: Rs 3,347 crore).
• Ebitda margin at 40.4% vs 20.9%.
• Net profit at Rs 22,54.6 crore against a net loss of Rs 263.1 crore a year earlier (estimate: Rs 1,328 crore).

JSPL's consolidated debt fell to Rs 25,621 crore as of December from Rs 28,910 crore at the end of September.

For the full financial year, the company targeting a 15:15:50 approach--Rs 15,000-crore Ebitda, a similar level of or lower debt and close to Rs 50,000 crore of top line, Sharma told BloombergQuint in an interview.

Watch the full interview here: