JSW Steel reported a sharp jump in the consolidated net profit of nearly 22 times on a year-on-year basis to Rs 4,191 crore for the quarter ended March 31, 2021, clocking its highest quarterly profit ever.
The multi-fold jump comes on the back of sharp increase in steel prices globally and a lower base of last year, which was impacted by the disruptions caused by Covid-19 pandemic.
The net profit, however, remained below Bloomberg consensus estimates of Rs 4,325 crore, impacted by an exceptional item reported during the quarter. The exceptional item represents impairment provision of Rs 83 crore relating to the US coal business towards the value of property, plant and equipment and goodwill.
The steel producer also reported its highest-ever quarterly revenue from operations, which increased 51% y-o-y to Rs 26,934 crore.
“The exceptional fourth quarter performance of the company was due to strong domestic demand supplemented by exports, and improved steel prices,” it said in a statement.
Consequently, the Ebitda (earnings before interest, tax, depreciation and amortisation) during the quarter surged nearly three-fold to Rs 8,440, while the operating margins were up 1,470 basis points to 31.3%.
The strong operating performance during the quarter is attributable to a robust pricing environment for Indian steel producers, who also undertook multiple price hikes during the quarter.
The company’s consolidated saleable steel sales stood at 14.95 million tonne versus 3.65 million tonne during January-March 2020. On a standalone basis, the crude steel production was lower by 6% y-o-y to 15.08 million tonne, while the saleable steel sales were at 14.88 million tonne, fall of 1% y-o-y.
The company said its debt has come down by Rs 858 crore even after capital expenditure and acquisitions aggregating to around Rs 15,000 crore during FY21. The consolidated net debt to equity ratio stood at 1.14x at the end of the quarter versus 1.48x last year. Net debt to Ebitda also improved to 2.61x against 4.50x at the end of 4Q FY20.
The company’s board has approved some key projects, which will enable JSW Steel to continue to meet the growth in steel demand in India, it said. “This is in line with the government’s national steel policy projections of 300 MTPA capacity requirements by 2030. The new projects approved entail a capex of Rs 25,115 crore including sustenance and other capex of Rs 6,565 crore spread over three years from FY22 to FY24,” it said.
JSW Steel expects combined volumes of its production to rise to 22.94 million tonne in the current financial year. JSW Steel’s standalone crude steel volumes will rise to 18.5 million tonne, while sales to 17.4 million tonne.
On the outlook, the company said, “While the timing and trajectory of reopening of the Indian economy will follow the decline in cases, the government’s pro-growth policies and recent Union Budget for FY22 should help the economy recover and resume its trajectory of robust growth that were witnessed prior to the onset of the second wave”.