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Informist, Monday, Oct. 28, 2024

 

By Rajesh Gajra

 

MUMBAI – Jindal Steel & Power Ltd. is likely to have lost ground in revenue in the quarter ended September after a high single-digit recovery in the June quarter, which had come after seven consecutive quarters of revenue decline. The volume, which rose 13.6% on year in the June quarter, is also seen declining in the September quarter. In Jul-Sept, a fall in domestic steel prices, lower volume due to weak domestic and export demand, and shutdown of the Angul factory in Odisha during a part of the quarter would have taken a significant toll on Jindal Steel's top line.

 

The same factors would also likely hit the company's operating profit during the September quarter with partial offset from lower prices of coal--the fuel that powers steel manufacturers' blast furnaces. The fall in operating profit would likely drag down Jindal Steel's bottom line.

 

The steel major is seen reporting a consolidated net profit of INR 8.18 billion in the September quarter, down 41% on year and 39% sequentially, according to an average of estimates from eight brokerages. The net profit estimates range from a low of INR 6.68 billion to a high of INR 10.75 billion. If the company reports a consolidated net profit number that matches the estimate, it will be the third consecutive quarter of net profit fall and the highest quantum of fall in the three quarters.

 

Jindal Steel's Jul-Sept consolidated revenue will likely be INR 116.51 billion, down 4.9% on year and 14.4% sequentially. In the quarter ended June, the company had recorded an 8.2% on-year increase in revenue which was a major improvement since revenues were falling for seven consecutive quarters prior to it. The revenue estimates range from a low of INR 108.74 billion to a high of INR 133.39 billion. The earnings before interest, tax, depreciation, and amortisation is estimated to be INR 21.03 billion on average with the brokerage estimates ranging from a low of INR 19.06 billion to a high of INR 24.18 billion.

 

Brokerage Kotak Securities' institutional equities research estimates Jindal Steel's volume to be down 5.5% on year at 1.9 million tonnes in the September quarter "due to weaker exports", and sales realisation to decrease 4% on year and 6.1% on quarter "on account of weak regional prices and product mix". The Jul-Sept volume estimate by brokerage Antique Stock Broking is lower at 1.8 million tonnes, down 10.5% on year.

 

The EBITDA will be hit by a "sharp fall in domestic steel prices and maintenance shutdown at Angul", said brokerage ICICI Securities. The Angul steel factory, according to the company in its annual reports, operates the "largest blast furnace in India". In 2023-24 (Apr-Mar), Jindal Steel had a total crude steel capacity of 9.6 million tonnes per annum with 6 million tonnes per annum being in its Angul factory and the balance in its factory in Raigarh, Jharkhand. The company is currently in the process of doubling its Angul factory's capacity and the expansion is likely to be completed by the end of FY26. ICICI Securities further said cost benefits from lower iron ore prices and coking coal costs during the September quarter are "likely to be constrained by inventory effect".

 

Jindal Steel will disclose its financial results for the quarter ended September on Nov 6. Post-announcement, analysts and investors will be watching for management commentary on captive mines, raw materials, selling price, coal costs, and capital expenditure timelines, brokerage Motilal Oswal Financial Services said in its preview report.

 

Monday, shares of Jindal Steel closed at INR 919, up 2.2%, on the National Stock Exchange.

 

Following are the Jul-Sept consolidated earnings estimates of Jindal Steel based on reports from eight brokerage houses:­­

 

Brokerage firm	Net sales	Net profit	EBITDA
	------------(In INR million)----------
Antique Stock Broking Ltd	1,09,546	8,270	20,082
Elara Securities (India) Pvt Ltd	1,19,220	7,691	20,155
ICICI Securities Ltd	1,08,736	6,681	19,063
IDBI Capital Market Services Ltd	1,19,843	8,555	21,885
Kotak Institutional Equities	1,11,357	7,112	20,356
Motilal Oswal Financial Services Ltd	1,33,389	10,750	24,175
Nuvama Wealth Management Ltd	1,13,195	8,170	21,713
Prabhudas Lilladher Pvt Ltd	1,16,800	8,200	20,800
Average	1,16,511	8,179	21,029

 

End

 

Edited by Manisha Baxla

 

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