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Informist, Monday, Apr. 28, 2025

 

By Rajesh Gajra

 

NEW DELHI – Jindal Steel and Power Ltd. may be the only one among the top four steel companies in the country whose sales volume is likely to have declined on year in the March quarter, analysts say. They expect the other three large steel producers – JSW Steel Ltd., Tata Steel Ltd., and Steel Authority of India Ltd. – to report on-year increases in steel sales volume for the March quarter.

 

In the previous quarter, Jindal Steel had reported a 5% on-year increase in steel sales volume. Lower construction activity and demand may have been a key reason behind the on-year decline in the company's volume for the March quarter, according to some analysts. But the other three steel majors are expected to have tapped better into steel demand opportunities in the country to grow their volumes.

 

The company's steel realisations are seen down year-on-year due to lower steel prices for the top four steel majors, including Jindal Steel. The revenue of the company will, therefore, likely decline. Sequentially, however, Jindal Steel is likely to see growth in both volume and realisations, and the increases in each are likely to range from flat to mid-single digit.

 

On an on-year basis, the operating profit, or earnings before interest, tax, depreciation, and amortisation, of Jindal Steel is likely to decline due to lower revenue. Costs will not help or worsen the EBITDA as the benefit of lower coking coal costs will be offset by other non-benign input costs. The bottom line growth is largely to mirror the revenue and operating profit growth.

 

Jindal Steel is likely to report a consolidated net profit of INR 9.78 billion for the March quarter, up 4.6% on year and 2.9% sequentially, according to the average of the estimates of 12 brokerage firms. The consolidated revenue from operations is seen declining 11% on year and increasing 2.7% sequentially to INR 120.65 billion.

 

The highest net profit estimate is INR 10.68 billion by Emkay Global Financial Services while the lowest is INR 8.60 billion by Prabhudas Lilladher. The revenue estimates range from a low of INR 112.47 billion by Emkay to a high of INR 126.17 billion by IDBI Capital Market Services. The company's earnings before interest, tax, depreciation, and amortisation for the March quarter is seen at INR 22.99 billion according to the average of estimates by 11 brokerages.

 

For the December quarter, the company's consolidated revenue from operations increased  0.4% on year and 5% sequentially to INR 117.51 billion, while the consolidated net profit fell 51% to INR 9.50 billion from the year-ago quarter and increased 10% sequentially.

 

The sales volume of Jindal Steel for the March quarter is likely to have declined 0.5-2.5% on year, according to four brokerages. Kotak Securities' institutional equities team expects a 0.5% decline on year in sales volume, while brokerage firm Prabhudas Lilladher said in its preview report that the company's sales volume is likely to decline around 5% year-on-year "due to lower construction activities".

 

Brokerage ICICI Securities has estimated a 2.5% on-year decline in the sales volume and Nuvama Wealth Management sees it falling 1.5%. Sequentially, however, these four brokerages have estimated the sales volume of Jindal Steel to grow up to 5.3%.

 

ICICI Securities said in its preview report that the realisation of Jindal Steel in the March quarter is unlikely to increase but will be "broadly stable" on a year-on-year basis, as the rise in prices of flat steel products will be offset by a corresponding decline in the prices of long steel products. But some other brokerages expect the company's realisation to decline. Kotak estimates the decline to be as high as 7.8% on year, while Prabhudas Lilladher expects a 1% decline.

 

The EBITDA per tonne of Jindal Steel in the March quarter is estimated to fall 7.8% on year by Kotak and 5% by Prabhudas Lilladher. Both the brokerages, however, expect growth sequentially.

 

The company will detail its March quarter earnings on Wednesday. Post the announcement of the results, investors and analysts will seek updates from the management on demand conditions for the company and the steel price outlook amid the recent 12% safeguard tariff imposed by the government on imports.

 

On Friday, shares of Jindal Steel ended 1.8% lower at INR 891.80 on the National Stock Exchange of India.

 

Following are the Jan-Mar consolidated earnings estimates for Jindal Steel based on reports from 12 brokerage firms in descending order of estimate of net profit:

 

 

End

 

Edited by Avishek Dutta

 

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