JSW Steel on Wednesday reported an almost three times jump in its consolidated net profit (y-o-y) at Rs 2,879 crore during the January-March quarter on the back of rise in steel demand as well as prices, beating analyst estimates of Rs 1,834 crore. A better geographical and product mix aided the company to improve its top line.
The revenue from operations on a consolidated basis were up a good 16% y-o-y to Rs 20,817 crore, beating Bloomberg analyst estimates of Rs 19,378.3 crore. In the coated products, the company registered a production volume of 0.48 million tonne and sales volume of 0.47 million tonne. The company’s Ebitda (earnings before interest, tax, depreciation and amortisation) margins increased sharply by 575 basis points y-o-y to 25.4%, while the consolidated Ebitda grew 67% to Rs 5,290 crore.
Speaking to news persons at an earnings conference, Seshagiri Rao, joint managing director and group CFO, said robust performance has been because of a combination of rise in domestic sales due to increase in demand. “Our end use sales to automobile sector, sales of coated steel products and long products all have gone up during the quarter”.
The company also achieved its highest ever quarterly sales volume of 4.22 million tonnes, which grew by 7% y-o-y. Domestic sales volume surged 41% y-o-y to 3.55 million tonnes. The current quarter was also marked by a strong growth in demand across regions, which in turn led to higher commodity prices and spreads.
Meanwhile, foreseeing an increase in demand from most end user industries and also requirement from growing infrastructure sector in the country, Rao said the company is embarking on an enhanced brownfield expansion programme and increasing the capex investment to Rs 44,400 crore by March 2020.
The company announced an increase of Rs 17,600 crore in its capex plan in addition to the over Rs 26,800 crore that it already has in place till March 2020. This will create additional capacity of 6.6 million tonnes of crude steel and 3.3 million tonnes of downstream capacity, he said. It will be funded with Rs 25,000 crore of debt and Rs 19,000 crore of cash accruals of company.
The consolidated net debt stood at about Rs 38,019 crore as on March 31, 2018, down from Rs 41,500 crore sequentially. The weighted average interest cost decreased by 24 basis points during the year to 7.04%.
For the full year ended March 2018, JSW Steel’s net profit increased 76% to Rs 6,113 crore on net sales of Rs 71,503 crore, up by 18%. The Ebitda for the year surged 22% y-o-y to Rs 14,794 crore.