JSW Steel posts highest Rs 5,900-crore quarterly net, beats Street estimates

By: |
July 24, 2021 1:30 AM

During the quarter, the joint venture operations, mainly Bhushan Power & Steel and JSW Ispat Special Products, performed satisfactorily. The share of profit from JVs for the quarter stood at Rs 323 crore.

JSWJSWS will invest Rs 7billion in tranches into JSW paints over FY22-25E.

JSW Steel beat analyst estimates on all fronts and reported its highest-ever consolidated quarterly net profit of Rs 5,900 crore for the quarter ended June, supported by higher steel sales volumes on the back of increase in demand across sectors especially from automobiles which jumped five times. Bloomberg’s consensus estimates had pegged the net profit at Rs 4,850.31 crore. The steelmaker had reported a consolidated net loss of Rs 582 crore in the corresponding quarter last year— its first quarterly loss in more than four years.

The figures for the quarter are not comparable with the same quarter last year as operations were severely affected by the nationwide lockdown due to Covid-19 in Q1FY21. “India was impacted by a second wave of the pandemic during April and May 2021, with cases declining sharply from the month of June. The decline in cases, with an aggressive vaccination push, has brightened the near-term prospects of the Indian economy,” the company said.

The company registered its highest ever quarterly revenue from operations on a consolidated basis at Rs 28,902 crore during the quarter and highest ever Ebitda (earnings before interest, tax, depreciation and amortisation) of Rs 10,274 crore, with operating margin coming in at 35.5%. Revenues from operations in Q1FY21 stood at Rs 11,782 crore, while Ebitda had come in at Rs 1,341 crore and margin at 11.4%.

Sales of saleable steel for the quarter was 3.61 million tonne, lower by 11% sequentially, impacted by lower domestic demand due to the severe second wave, especially in the southern and western regions of India. Exports increased by 9% quarter-on-quarter boosted by robust demand on the back of the ongoing recovery in the global economy. On a year-on-year basis, sales volume increased by 29%, as Q1FY21 was severely impacted by the Covid-related lockdown. JSW Steel’s domestic automotive sales increased by about 5x year-on-year, while domestic automotive production grew by about 3x y-o-y in the country.

During the quarter, the joint venture operations, mainly Bhushan Power & Steel and JSW Ispat Special Products, performed satisfactorily. The share of profit from JVs for the quarter stood at Rs 323 crore.

The company’s consolidated net debt to equity improved marginally and stood at 1.04x at the end of the quarter versus 1.14x at the end of March 2021. Net debt to Ebitda also came down to 1.89x as against 2.61x at the end of March. During the quarter, the company spent Rs 2,688 crore on capex, against a total planned capex spend of Rs 18,240 crore for financial year 2021-2022.

Going forward, the company has a favourable outlook which it said is supported by government’s cautious approach towards a possible third wave of Covid-19, increase in spends on health infrastructure and accelerated pace of vaccines. “Accelerated pace of vaccination in India is leading to improved business sentiment. Ongoing normal monsoons, and the accommodative stance of the RBI are key positives for the economy. Overall, faster ramp-up of vaccination programs and favourable fiscal policies with large budgetary allocations focused on infrastructure are expected to support a strong economic recovery,” it said.

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