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Informist, Tuesday, Jul 16, 2024

 

By Rajesh Gajra

 

MUMBAI – A 6% sequential fall in JSW Steel Ltd's consolidated crude steel production to 6.61 mln tn in Apr-Jun is likely to have resulted in the company registering lower sales volume during the quarter. The capacity utilisation at Indian operations of the company declined sharply to 87% from 93% in the previous quarter.

 

But while some analysts expect the sales realisation to have been high enough for revenue to go up sequentially, others expect the realisation to have been feeble and unable to offset the impact of fall in volume. The company's net profit would be affected by the weak top-line show, but the impact is likely to have been buffered by lower raw material costs during the quarter.

 

JSW Steel's consolidated net profit for the June quarter is likely to be 11.35 bln rupees, down 12.6% sequentially and 52% on year, according to the average of estimates from six brokerages. The estimates ranged from a low of 2.13 bln rupees to a high of 21.04 bln rupees.

 

The company's consolidated revenue for Apr-Jun is expected to be 426.07 bln rupees, down nearly 8% over Jan-Mar but up 0.9% on year. The revenue estimates vary from 403.1 bln rupees to 477.02 bln rupees. The earnings before interest, taxes, depreciation, and amortisation is estimated to be in the range of 50.85 bln rupees and 73.94 bln rupees.

 

Notwithstanding the sequential fall in production volume, brokerage YES Securities expects JSW Steel's revenue to go up by 3.1% on quarter, "primarily led by higher realisations for both flats and longs". On the other hand, Kotak Securities' Institutional Equities Research, which sees a 10% sequential decline in JSW Steel's standalone volume, expects only a marginal increase of 0.3% on quarter in realisations. As a result, the brokerage estimates a 9.1% sequential fall in the company's revenue to 420.81 bln rupees.

 

Input costs are seen to have been lower in Apr-Jun, which would aid the company's profitability. "We expect QoQ (quarter-on-quarter) margins improvement to be driven by coal cost moderation" and flat advertisement and promotional costs, brokerage Motilal Oswal Financial Services said in its preview note. Reducing coking coal costs and rising hot rolled coil steel prices is likely to have aided the sequential growth in operating margins, according to YES Securities.

 

JSW Steel will detail its Apr-Jun earnings on Friday. Investors will be watching for the performance of the company's domestic and overseas subsidiaries and management updates on capital expenditure plans and timelines, according to Motilal Oswal Financial. Today, shares of JSW Steel ended 0.3% up at 934.35 rupees on the NSE.

 

Following are the Apr-Jun consolidated earnings estimates for JSW Steel from six brokerages:

 

Brokerage	Net Sales	Net Profit	EBITDA
	-------(In mln rupees)-------
Elara Securities (India) Pvt Ltd	4,08,552	6,076	50,852
IDBI Capital Market Services Ltd	4,24,936	21,035	69,690
Kotak Institutional Equities	4,20,806	13,240	59,454
Motilal Oswal Financial Services Ltd	4,22,000	14,000	63,000
Nuvama Wealth Management Ltd	4,03,093	11,606	55,656
YES Securities (India) Ltd	4,77,015	2,129	73,937
Average	4,26,067	11,348	62,098

 

End

 

Edited by Rajeev Pai

 

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