JSW Steel’s Profits Soar 100% Amidst Strong Revenue Growth, Surpassing Analysts’ Expectations.
JSW Steel has reported a significant year-on-year increase in its consolidated profit for the June quarter, surging to Rs 4,696 crore, more than doubling from previous figures. This robust performance has been attributed to a combination of strong revenue growth, increased production volumes, and a notable reduction in finance costs. The quarterly profit, while substantial, reflects a 75% decrease sequentially due to one-time gains reported in the preceding quarter. Despite this, the earnings exceeded market expectations, prompting a 1.4% uptick in the company’s stock, now trading at Rs 1,238.35 on the BSE.
The consolidated revenue from operations also displayed resilience, with a 10% year-on-year growth to Rs 47,364 crore. On a pro forma basis, adjusting for the deconsolidation of Bhushan Power, the revenue growth reached 19%. This momentum was primarily driven by higher steel prices and a 4% increase in consolidated sales volumes, culminating in total sales of 6.25 million tonnes for the quarter. Importantly, the rise in revenue has outpaced the growth in total expenses, which increased less than 4% year-on-year to Rs 41,830 crore, benefiting from a substantial 23% decline in finance costs.
The company’s financial metrics continue to improve, with net debt reducing significantly to Rs 46,157 crore compared to Rs 53,870 crore in the previous quarter. Consequently, the net debt-to-equity ratio has improved to 0.42 times, down from 0.51 times, while the net debt-to-EBITDA ratio has also shown favorable movement from 1.81 to 1.46 times. Additionally, the earnings before interest, tax, depreciation, and amortization (EBITDA) for the company rose 38% year-on-year to Rs 9,383 crore, with the EBITDA per tonne of steel reaching Rs 14,990, a 23% increase from the previous year.
JSW Steel maintains its capital expenditure guidance for the current fiscal year, estimating a spend of Rs 22,000 to 24,000 crore. The company has already allocated Rs 4,869 crore during the quarter. This strategic investment underscores the management’s focus on scaling operations and enhancing production capabilities, aligning with the overall growth trajectory observed in the steel sector. Hence, investors can consider the current performance as an indicator of strength and resilience, with a promising outlook for the remainder of the fiscal year.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)