Wednesday, July 24, 2024

JSW Steel Reports ₹2,773 Crore Profit in Q2 2023 Amid Strong Domestic Demand

JSW Steel, led by Sajjan Jindal, has announced a net profit of ₹2,773 crore for the September quarter, marking a significant turnaround from a net loss in the same period the previous fiscal year. The Mumbai-based steel manufacturer reported a 6.71% year-on-year increase in consolidated revenue, reaching ₹44,584 crore, according to an official exchange filing.

During the quarter, the company’s consolidated earnings before interest, tax, depreciation, and amortization (Ebitda) amounted to ₹7,886 crore, with an Ebitda margin of 17.7%.

JSW Steel attributes this robust performance to increased government investments in infrastructure, with year-to-date spending up by 48% as of August. Additionally, positive consumer sentiment has been driving investments in the country, with notable growth seen in infrastructure, energy transition, defense, and Production-Linked Incentive (PLI) schemes.

The company noted that both steel production and consumption have remained strong, supported by government investments and a healthy overall economy. During the quarter, the company’s consolidated crude steel production reached 6.34 million tonnes, a 12% year-on-year increase. However, maintenance shutdowns in the company’s Indian operations led to an average capacity utilization of 89%. The Ohio, USA operations experienced lower capacity utilization due to adverse market conditions.

JSW Steel reported domestic sales of 5.49 million tonnes, up by 8% year-on-year, driven by robust domestic demand and an improved product mix. Exports accounted for 11% of sales from Indian operations, totaling 0.69 million tonnes.

The company’s net gearing (net debt to equity) stood at 0.92 times at the end of the second quarter of the current fiscal year. Net debt increased to ₹69,195 crore during the quarter, primarily due to additional borrowings related to the merger of JSW Ispat Special Products Limited (JISPL).

JSW Steel’s consolidated capital expenditure (capex) during the second quarter of FY24 in India amounted to ₹3,816 crores. In the first half of FY24, consolidated capex reached ₹7,996 crores, compared to the planned consolidated capex of ₹20,000 crores for the fiscal year.

For the quarter ending on September 30, 2023, the company achieved a total combined volume of crude steel production of 6.41 million tonnes, with a sale volume of 6.39 million tonnes. The company’s guidance for FY24 Production is set at 26.34 million tonnes with Sales of 25.00 million tonnes.

In the US subsidiary located in Ohio, JSW Steel reported an Ebitda loss of $29.4 million due to lower volumes and adverse market conditions, which also impacted steel prices during the quarter. In Italy, the company reported an Ebitda of Euro 8.9 million for the quarter, with high volumes and lower net realizations affecting performance.

Regarding ongoing projects, the company provided updates on the progress of the 5 MTPA brownfield expansion at Vijayanagar, stating that civil works are underway, and it is expected to be completed by the end of FY24.

JSW Steel’s shares ended the day at ₹662.80, representing a 1.8% increase from the previous close.

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