ADVERTISEMENT

JSPL Shares End At Two-Year High As Output, Sales Surge

Jindal Steel reported the highest ever production of pellets and wire rods in October.

Galvanized steel rolls stand before the polymer coating process in the metal polymer coating unit at the Cherepovets Steel Mill. (Photographer: Andrey Rudakov/Bloomberg)
Galvanized steel rolls stand before the polymer coating process in the metal polymer coating unit at the Cherepovets Steel Mill. (Photographer: Andrey Rudakov/Bloomberg)

Shares of Jindal Steel and Power Ltd. rose to their highest in more than two years after the steelmaker reported an increase in production and sales as economic activity gradually picks up.

Standalone sales rose 10% year-on-year to 6 lakh metric tonnes in October, according to an exchange filing. Standalone production for the month was up 13% over the year earlier to 5.85 lakh metric tonnes.

Its exports grew 37% year-on-year, and contributed 28% to the company’s overall sales volumes for October. JSPL also reported the highest ever production of pellets and wire rods at 7.01 lakh metric tonnes and 49,062 metric tonnes, respectively, the filing said.

India’s steel sector has staged a recovery in the last few months as demand picked up after the nation eased the lockdown curbs. Steel consumption, according to CARE Ratings research report, grew 96% in the quarter ended September compared with the preceding three months. Base metal prices, too, have firmed up on improving demand. Domestic mills, according to a Macquarie note, have raised benchmark hot-rolled coil prices by Rs 750 per tonne in November—the second hike this month. Prices were hiked by Rs 1,000-1,250 per tonne at the beginning of the month.

Prices of coking coal, a key raw material used in steel-making, however, remained soft after China stopped buying coal from Australia amid diplomatic tensions. “This bodes well for Indian steel companies given their dependence on imported coking coal,” Macquarie said in the note, as it rates Jindal Steel as ‘outperform’ with a price target of Rs 269 apiece.

Of the 20 analysts track the steelmaker, 19 have a ‘buy’ rating and only one suggests a ‘sell’. The average of Bloomberg consensus 12-month target price implies an upside of 13.4%. Shares of Jindal Steel ended 2.3% higher at Rs 242.05 apiece—the highest since June 2018. The stock also rose for the third straight session.