Analyst Concall
Demand, lower input cost to aid Jindal Steel in Oct-Mar
This story was originally published at 22:59 IST on 6 November 2024
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--Jindal Steel: Almost 80% of slurry pipeline project completed
--CONTEXT: Jindal Steel management comments in post-earnings analyst concall
--Jindal Steel: Expect Oct-Mar to be better than Apr-Sept
--Jindal Steel: Hot strip mill project utilisation at 40%
--Jindal Steel: Coal gasification capacity utilisation to rise to 70% FY25
--Jindal Steel: To start operations at Utkal B1 mine by Jan-Mar
--Jindal Steel: Expansion of Angul steel plant to continue
--Jindal Steel: Expect coking coal price to decline by $22-25 per tn Oct-Dec
--Jindal Steel: Co's utilisation of direct reduced iron capacity at full level
--Jindal Steel: Angul plant capacity utilisation at 85% Jul-Sept, up 4% QoQ
By Steffy Maria Paul and Darshan Nakhwa
MUMBAI – Jindal Steel and Power Ltd. said it expects its performance in Oct-Mar to be better than Apr-Sept owing to strong seasonal demand and lower input costs. The company's management said in a post-earnings call on Wednesday that it expects coking coal prices to fall $20-$25 per tonne in Oct-Dec, adding that it has taken price hikes of INR 1,000-INR 2,000 across products in Oct-Dec so far. The company also expects its earnings before interest, tax, depreciation, amortisation to be higher in the second half of the current financial year. The company's adjusted EBITDA for Jul-Sept was INR 21.24 billion, down 4% on year.
Responding to a question about the company's net debt, the management said it "will not go up too much". The company's net debt was INR 124.64 billion as of Sept. 30, compared to INR 73.13 billion a year ago. Currently, the company's net debt is 1.2 times its EBITDA, below its target of 1.5 times, it said. The company added that its capital expenditure on maintenance has been INR 6 billion every quarter. Jindal Steel's total capital expenditure on growth is INR 310 billion.
Talking about sourcing coal from the market, the company said, "...we will not be short on coal, so we will not need to buy any coal from the markets." The company said it is working comfortably with 50% utilisation of its coal gasification plant, and expects to increase it to around 70% in 2024-25 (Apr-Mar).
Speaking about its ongoing projects, the company said its second direct reduced iron project was on track to be completed by Oct-Dec of FY26. The company has also received approvals for the Utkal B-1 coal block in Odisha and expects its operations to start by Jan-Mar. The company also expects to start operations at the Utkal B-2 mine in FY26.
The company said that 80% of its slurry pipeline project between Barbil and Angul in Odisha has been completed and will be finished by Jan-Mar. The company said that its hot strip mill at its Angul plant is operating at 40% capacity utilisation, while the capacity utilisation for its direct reduced iron plant was at full level. The company added that its railway logistics project in Angul was on track and is expected to be completed by FY25. Jindal Steel is working on doubling the railway lines to Angul station to improve connectivity to its plant.
The company said its vision was to make its Angul plant the largest single-site steel plant in the world. On a question about further expansion of its Angul plant, the company said, "...we will not stop here. The cash flows would be strong enough to fuel the next level of growth. So we'll continue to grow." The company added that the capacity utilisation of its Angul plant for the quarter was at 85%, up 4% sequentially. It is looking to further improve the capacity utilisation, it said.
Jindal Steel reported its Jul-Sept earnings post market hours Wednesday. It posted a consolidated net profit of INR 8.61 billion for the September quarter on revenues of INR 112.13 billion. On Wednesday, shares of the company closed at INR 951.85 on the National Stock Exchange, up 1.7%. End
US$1 = INR 84.28
Edited by Tanima Banerjee
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