Mumbai: Sajjan Jindal-led JSW Steel Ltd said fiscal fourth-quarter profit tripled from a year ago, beating analysts’ estimates, on the back of higher production and sales.
Net profit rose to Rs1,009 crore in the three months ended 31 March from Rs301 crore a year ago, the company said on Wednesday.
Twelve analysts polled by Bloomberg had expected JSW Steel to report a profit of Rs749.40 crore while 14 brokers had estimated revenue of Rs16,297 crore. Revenue from operations rose 52.5% on year to Rs17,917 crore.
“In this challenging environment, we have reported excellent results. This has been possible due to our ability to adjust to market conditions, increase exports and contain costs,” said Seshagiri Rao, joint managing director and group chief financial officer of JSW Steel.
Consolidated Ebitda or operating profit for the company came in at Rs3,165 crore, up by 64% from a year earlier. Ebitda per tonne came in at Rs7,595. Net debt for the company stood at Rs41,549 crore.
“All our domestic subsidiaries have done very well. We have exceeded our guidance on production by 26% on year. We were able to preserve our margins in spite of the challenging environment,” said Rao.
The company is hoping steel demand will grow on the back of government’s infrastructure push, and has planned to invest Rs26,800 crore over the next three years to augment steel making capacity.
On 3 May, the Cabinet cleared a policy for the domestic steel sector to treble production capacity by 2030 and help the country meet its steel requirements. As part of this policy, India would require steel making capacity of 300 million tonnes by 2030 against the current capacity of 128 mtpa.
As part of its expansion plan, JSW Steel will spend Rs15,000 crore at its Dolvi plant in Maharahstra to double capacity from the present 5 million tonnes per annum (mtpa) to 10 mtpa. The project will be completed by 2020.
At its Vijayanagar plant in Karnataka, the company will augment capacity from 3 mtpa to 4.5 mtpa along with associated auxiliary units and modernization-cum-capacity enhancement at a cost of Rs4,200 crore, to be commissioned over 20 months.
“Looking at the kind of demand that is to come in future with the emphasis on affordable housing, and other infrastructure segment and with our strong balance sheet, we are in a better position to initiate the next phase of growth. So, by 2020-21, we will have enough capacity in India to meet demand,” added Rao.
The company plans to finance the expansion through debt and cash accruals. “This expansion would be spread out over a period of three years with each year requiring around Rs8,000 crore of investment. We would meet this investment need through debt and cash accruals. Though my debt would go up due to the additional fund raising, we would also be repaying it. So, debt may not go up substantially. We want to maintain our debt to equity at 1.75 against the present 1.85,” added Rao.
Ahead of the earnings announcement, JSW Steel’s shares rose 2.48% to Rs206 on BSE, while the benchmark Sensex gained 0.25% to 30,658 points.