Last Updated on October 23, 2023 by BFSLTeam BFSLTeam
Table of Content
Introduction
Founded in 1994, JSW Steel Ltd, part of the larger JSW Group, is a steel production giant of India. With 13 iron ore mines and a manufacturing capacity of 29.7 MTPA across 14 facilities India and the USA, the company exports to over 100 countries globally.
The company’s major subsidiaries include:
- JSW Coated Steel
- JSW Severfield Structures Ltd
- JSW Steel Coated Products Ltd.
- JSW Steel (USA) Inc
- Amba River Coke Limited
- JSW Steel Processing Centres Ltd
Major acquisitions include:
- Welspun Maxsteel Ltd
- JSW Praxaxir Oxygen Private Limited
- Heidelberg Cement India’s Grinding Facility
- Mining Concessions in Chile
JSW Steel declared its consolidated Q2 FY 23-24 results on 20 Oct, 2023. This report captures the key financial and operational highlights of the company’s performance for the period.
Additional Read: Q2 Results Dashboard
Financial Highlights
- Revenue from operations: ₹ 44,584 Cr
- Operating EBITDA: ₹ 7,886 Cr
- Underlying Volume Growth: 2%
- Profit After Tax (PAT): ₹ 2,773 Cr
- Net debt to equity: 0.92 x
- Net debt to EBITDA: 2.52 x
The company reported a revenue from operations of ₹ 44,584 Cr and an operating EBITDA of ₹ 7,886 Cr, with an EBITDA margin of 17.7%. The EBITDA saw a 12% QoQ improvement, driven by higher sales volumes and reduced coking coal costs. This increase was, however, partly offset by lower EBITDA contribution from the overseas operations. The Profit after Tax for the quarter was ₹ 2,773 Cr, representing a 14% increase QoQ and a significant recovery from the loss of ₹ 915 Cr reported in Q2 FY 23. The Net Debt increased to ₹ 69,195 Cr during the quarter, primarily due to additional borrowings arising from the merger of JSW Ispat Special Products Limited (JISPL).
The diluted earnings per share stood (EPS) at ₹ 11.33 for the quarter.
Additional Read: JSW Steel Ltd Share Price
Exceptional Items
Exceptional items for the quarter amounted to ₹ 589 Cr, including a fair value gain of ₹ 780 Cr on its investments held in CSSL following the fair valuation pursuant to the merger of CSSL and JISPL. The company also gained ₹ 198 Cr from the sale of property, plant, and equipment and mineral rights held at West Virginia. Additionally, a provision of ₹ 389 Cr was recorded pursuant to the dismissal of the company’s writ petition by the Honourable High Court of Bombay, Goa Bench in the Goa Green Cess matter.
Operations Highlights
- Consolidated crude steel production in Q2 FY 23-24: 6.34 mt, jump of 12% YoY
- Average capacity utilisation (India): 89%
- Consolidated saleable steel sales: 6.34 mt, up by 10% YoY
- JSW Coated obtains Environmental product declarations (EPDs) certification for 14 JSW Coated Steel products making all all JSW Steel products EPD certified.
- Proposed merger of Creixent Special Steels Limited and its subsidiary JSW Ispat Special Products Ltd. (JISPL) with JSW Steel approved and in place with effect from 31 Jul, 2023.
- Listed in the top 100 companies for Women in India for the 5th consecutive year by Avtar
and Seramount.
JSW Steels’ crude steel production jumped a healthy 12% when compared to the figure reported on 30 Sep 2023, but dropped 1% in comparison to Q1 this year (30 Apr, 2023). Planned maintenance related activities caused scheduled shutdowns leading to a pan-India utilisation of 89%. In the US, though, the utilisation was lower due to adverse economic conditions and related consumption.
Total steel sales for the quarter stood at 6.34 mt which was 10% YoY and 11% higher QoQ. Out of this, 5.49 mt was domestically sold with the remaining being marked as exports.
Q2 FY 23-24 saw a consolidated capital expenditure (capex) spend of ₹ 3,816 Cr and an operations expense (opex) of ₹ 7,997 Cr respectively.
JSW Steel Results: YoY and QoQ Comparison
| Q2 FY24 | Q2 FY23 | Q1 FY24 | |
| Revenue from operations | ₹ 44,584 Cr | ₹ 41,778 Cr | ₹ 42,213 Cr |
| Operating EBITDA | ₹ 7,886 Cr | ₹ 1,752 Cr | ₹ 7,046 Cr |
| Other Income | ₹ 237 Cr | ₹ 188 Cr | ₹ 331 Cr |
| Finance Cost | ₹ 2,084 Cr | ₹ 1,523 Cr | ₹ 1,963 Cr |
| Depreciation | ₹ 2,019 Cr | ₹ 1,805 Cr | ₹ 1,900 Cr |
| Exceptional Items Gain | ₹ 589 Cr | ₹ 591 Cr | — |
| Profit Before Tax | ₹ 4,585 Cr | – ₹ 853 Cr | ₹ 3,480 Cr |
| Tax Expenses | ₹ 917 Cr | ₹ 62 Cr | ₹ 1,052 Cr |
| Tax impact of earlier years | ₹ 895 Cr | — | — |
| Profit after Tax | ₹ 2,773 Cr | – ₹ 915 Cr | ₹ 2,428 Cr |
Future Outlook
Ongoing global macroeconomic and geopolitical factors have caused a market slowdown. While potential risks to global growth persist, the likelihood of a severe economic downturn has diminished.
- In the United States, a robust services sector and a healthy labour market continue to support economic expansion. However, the Federal Reserve’s commitment to maintaining higher interest rates to combat persistent inflation implies that elevated rates are likely to endure, potentially resulting in a slowdown by the end of 2023.
- In Europe, growth has faltered due to increased interest rates and the global economic deceleration, which has impacted exports. The easing of inflation and an improvement in global demand are anticipated to serve as catalysts for recovery.
- In China, economic activity experienced a slowdown at the outset of 2023 following the reopening after Covid restrictions. Nevertheless, China’s robust Q3 2023 GDP growth of 4.9%, coupled with industrial production, and services, indicate positive momentum.
- In Japan, healthy wage hikes are bolstering consumption growth, while the manufacturing sector is witnessing a slowdown. A prolonged global deceleration has adverse implications for Japanese exports, despite the depreciation of the Yen
- The Indian government’s focus on infrastructure development (with a 48% YoY increase in spending as of August) and a favourable consumer sentiment are driving investments. Strong progress is evident in infrastructure, energy transition, defence, and the Production-Linked Incentive (PLI) scheme, which are spurring capital expenditures.
Stock Performance
On 20 Oct, 2023, the company’s share closed at ₹ 771.65. This was 1.13% lower than its previous closing price of ₹ 780.45.
Source: https://www.jswsteel.in/sites/default/files/assets/industry/steel/IR/Financial%20Performance/Financials/2023-24/Q2/JSW-Steel_Q2_FY24_vf.pdf
