JSW Steel on Wednesday reported a 173.3% (y-o-y) jump in its standalone net profit at Rs 1,003.4 crore during January-March quarter on the back of a 59.7% (y-o-y) jump in revenue to Rs 16,952 crore. Both the top and the bottom line of the company beat Bloomberg consensus analyst estimates. The company said both its crude steel production and steel sales during the quarter, at 4.1 MT and 3.96 MT respectively, were the highest ever. The jump in sales comes despite weak domestic demand due to the effects of demonetisation which was offset via exports. For the full year, exports jumped by 153% (y-o-y) to 3.83 MT and accounted for over 25% of the company’s annual sales.
JSW Steel’s earnings before interest, taxes depreciation and amortisation (Ebitda) was, however, under a bit of pressure during the quarter with the Ebitda margin shrinking by about 50 bps. Seshagiri Rao, Joint MD and Group CFO of JSW Steel said coking coal prices were extremely volatile during the quarter, thereby putting pressure on margins. He also said that steel prices have corrected a bit since their peak in February but the company will ensure that margins remain intact.
Rao said that the company will incur Rs 26,800 on capital expenditure in the three years to FY20, to expand capacity, lower operating costs and enrich the product mix. “Roughly Rs 15,000 crore of this will be raised via debt while the rest will be through internal accruals,” he added. For FY18, the company guided for crude steel production of 16.5 MT, which would mark a growth of 4.4% over FY17, and for steel sales of 15.5 MT, which would mark a growth of 4.9% over the 14.77 MT it achieved in FY17.