JSW Steel’s Profit Rises Threefold In March Quarter

JSW Steel's March quarter profits rose nearly threefold on account of a one-time gain and improved performance of its subsidiaries in the U.S.

Net profit rose to Rs 2,996 crore in the quarter ended March from Rs 1,014 crore in the same period last year, according to its filings with the stock exchanges. That was much higher than the Rs 1,834 crore estimated by analysts tracked by Bloomberg. The bottomline was aided by a deferred tax credit of Rs 222 crore as compared with a tax expense of Rs 450 crore in the comparable quarter.

Revenue rose 25 percent to Rs 20,817 crore on a year-on-year basis driven by demand for long products coupled with higher utilisation levels.

Operational performance too surpassed estimates. Earnings before interest, tax, depreciation and amortisation rose 67 percent year-on-year to Rs 5,290 crore while the operating margin expanded 640 basis points to 25.4 percent.

“The operational performance at the U.S. operations of both the plate and pipe mill at Baytown, as well as the U.S. coal operations, have seen a consistent improvement during the course of the year,” JSW Steel said in its post earnings release.

Cautious Outlook

The company guided for a 2.5 percent growth in sales volumes and a 3 percent increase in production volumes for the financial year 2018-19 as it cautioned that surplus steel could be dumped in India due to imposition of U.S. tariffs on imports of steel and aluminium.

“With imposition of Section 232 in the U.S. and rising trade measures in other regions, there is a likelihood of surplus steel tonnages finding their way into India,” JSW Steel said.

Capex Plans

It has earmarked a capital expenditure of Rs 17600 crore for FY19 in order to set up a 175 MW and 60 MW power plants at Dolvi. Both are expected to be commissioned in March 2020 at an estimated cost of Rs 975 crore, JSW said.