Mumbai: JSW Steel Ltd has found itself in an unusual spot. Although the company has been consistently setting quarterly production and sales records and shrinking its expenses, it is making less money than a year ago.
India’s largest steelmaker ran at 91% capacity utilization during the October-December period, producing 6.82 million tonnes of metal—3% more steel than it did over the same period a year ago as well as in the preceding quarter.
Domestic sales for JSW Steel were at their highest ever for a quarter, just shy of 6 million tonnes. Sales of value-added products, which accrue higher margins, went up by a healthy 12%, improving the overall sales mix.
Despite all these healthy markers, the numbers tell a different tale. JSW Steel reported a 1% dip in its consolidated revenue year-on-year to ₹41,378 crore for the December quarter.
Earnings before interest, tax, depreciation and amortization (EBITDA) fell 22% year-on-year to ₹5,579 crore. Ebitda margin narrowed over 360 basis points to 13.5%.
The consolidated profit of ₹719 crore was less than a third of what it was a year ago.
The situation can be explained by the sharp fall in steel prices. Steel industry executives have blamed rising imports of cheaper steel from countries like China for breaking the prices in the domestic market.
For instance, prices of benchmark hot-rolled coils (HRC) of steel fell 15% from an average of ₹56,050 for a tonne in the 2023-24 third quarter to ₹47,708 for a tonne in Q3FY25, as per data from market intelligence firm BigMint. Steel prices are at the lowest level since November 2020.
One analyst tracking the company said that looking at falling realizations for steelmakers, he had expected a larger fall in EBITDA for JSW Steel, but cheaper raw materials offset some of the impact of lower prices.
“The standalone performance was in line with our expectation. Although the average selling price (ASP) was lower by Rs.1,186/tonne quarter-on-quarter, lower raw material cost led to lower reduction in EBITDA/tonne,” said Parthiv Jhonsa, lead analyst for metal and mining at Anand Rathi.
JSW Steel reported a consolidated EBITDA of ₹8,314 for every tonne of steel it sold during the December quarter, 31% lower than the ₹11,967 per tonne a year ago.
“Consolidated volumes and revenue were in-line with our estimates for the quarter. Improved volumes and various cost control initiatives taken by the company arrested the fall in EBITDA/tonne which was down by about Rs.555/tonne sequentially,” Jhonsa said. A fall in coking coal costs, better product mix and higher institutional and retail sales also helped moderate the sequential fall in EBITDA, he said.
JSW Steel’s net debt as of 31 December was marginally higher at ₹80,921 crore compared to ₹79,221 crore a year ago. Net debt to EBITDA also took a sharp hit, rising to 3.57 times compared to 2.64 times a year ago, largely been due to shrinking EBITDA.
The JSW Steel stock ended Friday’s trading 0.26% higher at ₹932.25 per share. The Sensex ended the session 0.43% lower.
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