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Informist, Wednesday, May 21, 2025

 

By Rajesh Gajra

 

NEW DELHI – The effect of a fall in prices due to pressure from cheap steel imports from China would have likely hit the year-on-year revenue growth of India's largest steel manufacturer JSW Steel in the March quarter. The mammoth steel corporation, however, performed better on production volume growth for the March quarter, on year and sequentially, according to a data released by the company. This would have most likely led to a similar sales volume growth in the March quarter.

 

Analysts differ on their expectations of whether the recent fall in coking coal prices and other input costs for steel companies led to a strong or weak increase in JSW Steel's earnings before interest, tax, depreciation, and amortisation per tonne in the March quarter compared with the same quarter a year ago.

 

Sequentially, however, the view is near unanimous that the EBITDA per tonne of JSW Steel would have risen strongly in the March quarter. The bottom line is seen largely tracking the EBITDA growth.

 

JSW Steel will likely report a consolidated net profit of INR 17.98 billion in the March quarter, according to an average of estimates by 16 brokerage firms. Excluding an outlier estimate of INR 64 billion by Systematix Shares and Stocks, the average net profit estimate is INR 14.9 billion, up 15% on year and 2.08 times on quarter. The highest net profit estimate, excluding the one from Systematix, is INR 23.50 billion by Nomura Equity Research while the lowest estimate is INR 10.49 billion by Equirus Securities.

 

 

The consolidated revenue from operations is seen declining 3.3% on year and increasing 8% sequentially to INR 447.3 billion. The revenue estimates range from a low of INR 411.30 billion by Systematix to a high of INR 471.15 billion by JM Financial Institutional Securities. The company's earnings before interest, tax, depreciation, and amortisation for the March quarter is seen at INR 63.8 billion according to an average of estimates by 14 brokerages.

 

As per production data released by JSW Steel on Apr. 7, the company's production from Indian steel factories jumped 13% on year and 9% on quarter to 7.40 million tonnes. The steel production at the factory in Ohio, the US, declined on year to 0.23 million tonnes from 0.25 million tonnes in the year ago quarter but was up from 0.21 million tonnes in the previous quarter.

 

Brokerage Motilal Oswal Financial Services expects the company's consolidated sales volume to increase 6.8% on year and 7.1% on quarter to 7.2 million tonnes. JSW Steel's realisation per tonne will likely fall by nearly 10% on year and increase by 0.8% sequentially, according to Motilal Oswal. A few other analysts differ on the on-year decline estimate of realisation per tonne. They see it declining around 7.7% on year.

 

Input costs, particularly coking coal costs, fell in the March quarter from the December quarter for all steel manufacturers. On a year-on-year basis, the coking coal costs had risen. While Motilal Oswal sees a marginal on-year increase in EBITDA per tonne for JSW Steel, analysts from other brokerage firms such as Kotak Securities' institutional equities team and Prabhudas Lilladher estimate the increase to be in double digit. Sequentially, most brokerages, including Motilal Oswal, agree that the rise in EBITDA will be double-digit.

 

In the December quarter, the company's consolidated revenue from operations had declined 1.3% on year and increased 4.3% sequentially to INR 413.78 billion, while the consolidated net profit had fallen 70% on year and jumped up 63% sequentially to INR 7.17 billion. The company's shares ended Wednesday 1.2% down at INR 1,000.90 on the National Stock Exchange. At the current price level, the shares have risen 7.6% from closing price of INR 929.90 on Jan. 23, the day prior to the announcement of December quarter earnings.

 

The company will detail its March quarter earnings on Friday. Post-announcement of the results, investors and analysts will watch for the management commentary on the likely impact of the 12% safeguard duty imposed on steel imports by the government at the start of the current financial year on realisations in the next couple of quarters. They will also track company's outlook on steel demand for FY26 and input costs.

 

Analysts and investors will also keenly watch for the management comments on the implications of the Supreme Court order on May 2 rejecting the resolution plan of JSW Steel in the insolvency proceedings of Bhushan Power and Steel Ltd. and ordering the liquidation of the company. JSW Steel had paid INR 193.5 billion towards the acquisition of 83.28% stake in Bhushan Power and Steel.

 

A 500-day-plus delay in JSW Steel paying financial creditors for Bhushan Power and Steel under the resolution process got the company into trouble with the court. Brokerage firm Prabhudas Lilladher said in an update on the Supreme Court order implication Bhushan Power and Steel, with 4.5 million tonnes per annum capacity, contributes around 12% of JSW Steel's total annual capacity of nearly 36 million tonnes and around 10% of consolidated earnings before interest, tax, depreciation, and amortisation.

 

Following are the Jan-Mar consolidated earnings estimates for JSW Steel based on reports from 16 brokerage firms in descending order of estimate of net profit:

 

Brokerage firm:	Net Sales	Net Profit	EBITDA
	(In INR million)
Systematix Shares and Stocks (India) Ltd	411,300	64,000	53,500
Nomura Equity Research	459,675	23,503	70,047
Kotak Institutional Equities	469,772	17,525	70,245
Motilal Oswal Financial Services Ltd	447,000	17,200	65,800
Sharekhan Ltd	445,200	16,550	---
Prabhudas Lilladher Pvt Ltd	437,200	15,900	60,600
Anand Rathi Share and Stock Brokers Ltd	460,330	15,441	---
Emkay Global Financial Services Ltd	466,103	15,424	66,451
YES Securities (India) Ltd	429,097	14,745	67,167
Elara Securities (India) Pvt Ltd	450,325	14,047	63,876
HDFC Securities Ltd	456,510	13,080	64,050
Nuvama Wealth Management Ltd	421,700	12,800	63,700
ICICI Securities Ltd	456,053	12,593	63,567
IDBI Capital Market Services Ltd	454,049	12,274	63,651
JM Financial Institutional Securities Pvt Ltd	471,146	12,164	60,379
Equirus Securities Pvt Ltd	420,696	10,486	59,547
Average	447,260	17,983	63,756

End

 

Edited by Akul Nishant Akhoury

 

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