JSW Steel Q4 Results: Higher Prices, Exports Drive Profit To 12-Quarter High

JSW Steel Ltd.’s profit jumped to the highest in at least 12 quarters amid rising domestic demand, supplemented by exports and improved steel prices.

The steelmaker’s consolidated net profit increased 57% sequentially to Rs 4,198 crore in the three months ended March, according to its exchange filing. That compares with the Rs 4,325-crore consensus estimate of analysts tracked by Bloomberg.

Highlights (QoQ)

• Consolidated revenue rose 23% to Rs 26,934 crore, against the Rs 26,009.6-crore forecast. The top line was aided by a favourable product mix and improved realisation.
• Operating profit increased 44% to Rs 9,280 crore, compared with a forecast of Rs 7,951 crore.
• Ebitda margin expanded to 34.5% from 29.5%.

Ebitda Performance Of Overseas Units (QoQ)

• Ohio unit reported Ebitda loss of $24.18 million vs -$21.26 million.
• U.S. plate and pipe mill Ebitda loss at $6.6 million vs -$8.45 million.
• Italy arm reported Ebitda loss of $2.52 million vs -$0.52 million.

Deliveries of steelmakers rose over a year earlier in the quarter ended March on a low base as the Covid-19 lockdown interrupted supplies. JSW Steel, however, reported a 3.8% rise in shipments on a sequential basis, too. It said it achieved 99% of its standalone sales and revised crude steel production volume guidance of 15.0 and 15.2 million tonnes, respectively, for FY21.

Sales of value added and special products accounted for 52% of total sales volumes for the year, with branded product sales accounting for the remainder 48%.

The company said it has pushed the commissioning of its plant at Dolvi in Maharashtra to September as work related to units such as blast furnace and steel melt shop were delayed by the Covid-19 pandemic.

However, many of its downstream projects have either been completed or are commissioned.

• An 8 MTPA pellet plant at Vijayanagar in Karnataka was fully commissioned in March 2021, where production is underway.
• Following completion of pickling line and tandem cold mill project at Vijayanagar, one out of two continuous galvanising lines has commenced production, with the second expected to be operationalised by the second quarter FY22. A caster and zero power furnace was commissioned in March this year.
• All expansions barring two units at Vasind and one at Tarapur—all in Maharashtra—are completed.

The company has approved new projects entailing a capex of Rs 25,115 crore spread between FY22 and FY24. That includes:

• Expanding capacity by 5 MTPA at its plant in Vijayanagar at a capex of Rs 15,000 crore.
• Enhancing mining capabilities and efficiencies at capex of Rs 3,450 crore
• Setting up 0.12 MTPA colour-coated downstream facility entailing capex of Rs 100 crore.

Shares of JSW Steel closed 0.37% higher before the results were announced on May 21 compared with a 1.8% gain in the benchmark Nifty 50.