Jindal Stainless (JSL), the largest stainless steel manufacturer in the country, has earmarked a capex of Rs 2,500 crore for FY24 that will be used mainly for completing the recent acquisitions it made. The company is also aspiring to be among the top three stainless steel manufacturers in the world, outside of China.
“The capex would be largely met from internal accruals, and the debt after meeting the capex requirements would rise by `500-700 crore. The capex would be mainly used for the completion of the two recent acquisitions, Jindal United Steel (JUSL) and New Yaking. A portion would be used as sustenance capex,” JSL executive director & group CFO Anurag Mantri told FE in an interaction.
In March, JSL announced plans to acquire a 49% stake in Indonesia-based New Yaking, a producer of nickel a key ingredient in the production of stainless steel, for $157 million. JSL’s planned take an additional 74% holding in JUSL, a group company in which its already holds a 26% stake, will also be completed in the first half of this fiscal.
The company’s capex spend for FY23 was close to Rs 1,400 crore.
“The goal is definitely to be among the top 2-3 stainless steel manufacturers in the world. It might happen in the next couple of years or maybe in the next 4-5 years, that depends on the market conditions. We are very close, we have to add another 1-1.5 MTPA to reach there,” its MD Abhyuday Jindal said.
At present, JSL’s production capacity is at about 2.9 MTPA.
On JSL’s inorganic growth plans, Jindal said it was not scouting for any acquisitions. “We have no plans to diversify but if some good targets come by, we might look at it.”
JSL posted a 20% fall in consolidated net profit at Rs 716 crore for the quarter ended March, impacted by the export duties imposed on steel last year, compared with a net profit of `895 crore recorded during the same quarter a year ago. Its consolidated revenue from operations rose to Rs 9,765 crore (Rs 9,726 crore in previous year-ago period).
A consensus estimate by Bloomberg analysts had expected the firm to post a consolidated net profit of Rs 603 crore, on revenues of Rs 10,509 crore and Ebitda of Rs 904 crore.
“India being a nascent market, we generally export about 20-30% of our production, and this time we sold it in the domestic market. We also entered into certain low margin segments we generally don’t supply,” Jindal said.
The company also got board approval to raise Rs 5,000 crore through debt, while its board recommended a final dividend of `1.50 per share for FY23, taking the total dividend payment to Rs 2.50. The dividends declared in FY23 is the first in the last 15 years.
On a sequential basis, the company’s consolidated net profit rose 40% from Rs 513 crore, while revenues rose 8% from Rs 9,063 crore recorded in the December quarter.