Q2 Results: JSW Steel Profit Beats Estimates On One-Time Tax Gain

JSW Steel Ltd.’s quarterly profit beat estimates on the back of a one-time tax gain at a time when domestic steel demand grew at its slowest pace in three years.

Net profit rose 17.7 percent year-on-year to Rs 2,536 crore in the quarter ended September, the Sajjan Jindal-led steelmaker said in an exchange filing. That compares with the Rs 512.24-crore consensus estimate of analysts tracked by Bloomberg. Profit was aided by a one-time gain of Rs 2,207 crore.

While the company decided to pay tax under the existing structure till it exhausts its minimum alternative tax credits, it wrote back deferred tax liabilities expected to reverse when it moves to the new reduced tax rates.

The company’s total income, however, dropped 18 percent year-on-year to Rs 17,728 crore. Its total expenses during the quarter fell 8.3 percent to Rs 17,025 crore on a yearly basis.

Key Highlights Q2 (Y-o-Y)

• Revenue down 18.5 percent to Rs 17,572 crore.
• Operating profit down 44.3 percent to Rs 2,731 crore.
• Margin at 15.5 percent versus 22.8 percent.

WATCH | Full conversation with JSW Steel's Seshagiri Rao.

The steelmaker’s results come at a time when weak domestic demand is weighing on its growth. Demand for steel in India could grow at the slowest pace in three years as economic growth fell to a six-year low. The automobile sector—which the steel sector depends for 10-12 percent demand—too, is facing its worst slowdown in more than a decade.

Shares of JSW Steel fell 1.37 percent to Rs 222.65 apiece on the Bombay Stock Exchange at the end of Wednesday’s trading session.