JSW Steel Q2 FY25: Net Profit Plummets 85% to ₹404 Crore

JSW Steel Ltd, a key player in the Indian steel industry, released its financial results for the second quarter of FY25. The company reported an 85% year-on-year (YoY) decline in net profit to ₹404 crore, impacted by a significant fall in domestic steel prices and increased imports. Revenue from operations also saw an 11% YoY drop, reaching ₹39,837 crore for the quarter ending September 30, 2024. The results reflect challenging market conditions for the steel giant.

Quick Insights

• Revenue: ₹39,837 crore, down by 11% YoY.
• Net Profit: ₹404 crore, an 85% drop compared to last year.
• EPS: The EPS for the quarter has sharply declined, in line with reduced profitability.
• Segment Performance: Crude steel production rose 7% YoY, with capacity utilization at 91%, thanks to resumed operations post-maintenance.
• Management's Take: "Performance impacted by low steel prices and high import volumes. Expect relief from China's recent economic stimulus."
• Stock Reaction: Shares of JSW Steel traded 2.63% lower at ₹932.9 as of October 25, 2:05 pm.

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Management Commentary

JSW Steel reported that the challenging quarter was marked by an 11% revenue decrease to ₹39,837 crore, with profit levels significantly affected by a one-time exceptional charge of ₹342 crore. Higher taxes and weak domestic steel prices due to increased imports further pressured profitability. The company highlighted that while domestic demand remains robust, particularly in the automotive and construction sectors, cheap imports have driven prices to three-year lows. However, management expressed optimism over potential relief from the Chinese government's recent stimulus measures, which could curb cheap exports and stabilize steel prices.

Stock Market Reaction

Following the announcement, JSW Steel shares dropped 2.63%, trading at ₹932.9 on BSE. The stock opened at ₹939.15, hitting a high of ₹957.05 and a low of ₹929.05. Benchmark indices Nifty and Sensex were also down by 1.12% and 1.03%, respectively, reflecting market-wide pressure. The stock's mixed performance aligns with broader market trends and ongoing pressures in the steel sector.

About JSW Steel & Recent News

JSW Steel, one of India’s largest steel producers, has faced a challenging year with pressures from global market fluctuations and the impact of cheap imports on domestic prices. The September quarter, typically weak for steelmakers due to the monsoon, saw intensified challenges. The company’s crude steel production, however, showed resilience with a 7% YoY increase, supported by robust domestic demand. Looking ahead, industry experts forecast recovery with China's economic adjustments and reduced import volumes.

To Summarize

JSW Steel’s Q2 FY25 results underscore significant challenges, with an 85% drop in net profit to ₹404 crore and revenue down by 11% YoY. However, steady production growth and potential relief from Chinese economic policies could provide a more stable outlook.