In Charts: Indian Steelmakers Report Operational Beat But Tata Steel Lags Peers

Better realisations and improved cost savings aided the operational performance of Indian steelmakers in the quarter ended March. Tata Steel Ltd. lagged JSW Steel Ltd. while Jindal Steel and Power Ltd. managed to deliver a surprise.

“Unplanned shutdown at Kalinganagar, along with operational issues in Europe, weighed on Tata Steel,” Goutam Chakraborty, analyst-institutional research at Emkay Global Financial Services, said. “A change in product mix worked well for JSW Steel, while Angul ramp-up led to a boisterous performance for Jindal Steel & Power.”

Strong operational performance helped most steelmakers pare debt while higher steel prices and robust demand boosted their bottom lines. Sales volumes too rose in line with estimates for all three companies.

• Ramp-up of the newly commissioned Angul plant and cost-saving measures led to robust operational performance for JSPL.
• Sharp expansion in spreads and improving domestic demand drove Ebitda for JSW Steel and Tata Steel.
• Operational issues in Europe in the fourth quarter weighed on Tata Steel; performance in other regions cushioned the miss.

Volume growth of all three players matched estimates. JSPL reported double-digit growth in volume even as Tata Steel reported a sequential decline.

• Capacity constraints led to modest volume growth for JSW Steel.
• Blast furnace outage at Kalinganagar unit led to a decline in Tata Steel’s sales volume.
• Ramp-up at Angul unit drove volume growth for JSPL, helping it surpass peers.

• Realisations were driven by strong demand and higher domestic prices.
• Domestic steel prices increased by Rs 4,000-5,000 a tonne quarter-on-quarter.
• Efforts to achieve better product mix and greater focus on the domestic market augured well for JSW Steel.

• JSPL, JSW Steel and Tata Steel surpassed Bloomberg’s consensus estimates by 11 percent, 33 percent and 4 percent, respectively .
• Improving spreads due to higher steel prices drove Ebitda per tonne despite muted deliveries.
• Tata Steel’s performance was in line with estimates despite the shutdown at Kalanginagar.

• Tata Steel’s debt declined due to a Rs 9,000 crore rights issue.
• Operational efficiency lowered debt levels for JSW Steel and JSPL.