JSW Steel smashes Q2 earnings, revenue growth estimates

JSW Steel Ltd on Thursday came out with strong quarterly results that beat estimates for both profit and revenue growth on the back of robust demand and sales of value-added and special products.

The largest domestic steel producer in India reported a consolidated net profit of Rs 7,179 crore for the July-September period, up four-and-a-half times from Rs 1,595 crore in the quarter ended September 2020.

On a sequential basis, consolidated net profit rose 21.6% from Rs 5,900 crore in the three months ended June 30.

The billionaire Sajjan Jindal-led steelmaker’s consolidated revenue rocketed 68.7% year-on-year to Rs 32,503 crore and increased 12.5% sequentially.

However, the company’s stock price declined 1.74% to close at Rs 673.45 apiece in a weak Mumbai market on Thursday. The results were declared after trading stopped for the day.

Analysts were expecting profit to be around Rs 6,500 crore or less and revenue to be under Rs 32,000 crore.

JSW Steel Q2: Other highlights

1) Crude steel production at standalone level stood at 4.1 million tonnes.

2) Average capacity utilization was 91% for the quarter, similar to Q1 FY22, mainly due to planned shutdowns.

3) On a year-on-year basis, steel production rose 6%.

4) Sales of saleable steel were 3.79 million tonnes, up 5% sequentially, as Q1 was impacted by Covid-19.

5) Exports increased by 26% sequentially as domestic demand was subdued due to monsoon.

6) Operating EBITDA was Rs 8,673 crore, lower by 8.6% QoQ but up 108% year-on-year.

JSW Steel commentary, outlook

The company said quarterly sales were affected by inventory build-up due to start of its new downstream facilities and increase in inventories at ports.

JSW Steel’s EBITDA margin for Q2 was 31%. This is lower than the first quarter primarily due to elevated prices of iron ore, coking coal and other key inputs like power, natural gas and ferroalloys. 

Demand from automobile companies remained subdued due to a shortage of chips. However, JSW said construction and infrastructure activities are likely to gain momentum in the second half of the current fiscal (October-March).