Backed by a robust recovery in steel demand, JSW Steel on Friday reported a stellar set of numbers for the 3 months of October-December, as the net profit improved practically 14 occasions on a year-on-year basis to Rs 2,669 crore.
Consolidated income from operations surged 21% y-o-y to Rs 21,859 crore on the back of robust choose up in saleable steel volumes. Overall sales volumes had been slightly reduced by 2% y-o-y and 5% sequentially at 3.95 million tonne, due to reduced opening inventory driven by robust sales in the second quarter. However, domestic sales of 3.48 million tonne is the second ideal quarterly sales on record, up 13% y-o-y and 16% quarter-on-quarter on the back of robust momentum in domestic economy.
“Various high frequency economic indicators are better than the initial expectations pointing to a robust recovery. Growth in passenger vehicles and motorcycle sales, railway freight traffic, and electricity consumption is also strong,” the business stated in a statement.
The business recorded highest ever quarterly sales of flat solutions, propelled by robust demand of coated solutions. Automotive steel sales improved by 57% y-o-y, whilst India’s domestic automotive production grew by 16% y-o-y. Consequently, exports had been substantially reduced throughout the quarter. Overall worth added and particular solutions sales had been up 12% y-o-y, generating up 57% of general sales versus 51% in Q2FY21. This was primarily driven by robust automotive sales and improved off-take from industrial and engineering, solar and appliances segment.
“The domestic steel industry witnessed sharp demand recovery driven by restocking and higher demand from automotive, machinery, construction and infrastructure sectors aided by increased government spending. Specific policy initiatives such as production linked incentive schemes to encourage manufacturing in India and targeted stimulus packages to the MSME sectors,” the statement stated. On the back of robust demand atmosphere, JSW Steel enhanced typical capacity utilisation level to about 91% for the third quarter, against 86% in Q2FY21, and 66% in Q1FY21. The business also stated that it is on course to meet the annual guidance of 15 million tonnes of saleable steel sales, nevertheless, it is anticipated that crude steel production guidance achievement will be about 95% primarily due to constraints on iron ore availability in the nation.
As the domestic steel demand rebounded from current lows and gained momentum, the business additional calibrated its export volumes to 12% of the total sales at .47 million tonnes, in order to service the Indian industry. The business decreased inventories by .47 lakh tonnes throughout the quarter.
The business also reported robust development in consolidated Ebitda (earnings ahead of interest, tax, depreciation and amortisation) throughout the quarter which surged 142% y-o-y to Rs 5,946 crore. The spreads enhanced due to favourable alter in geographical mix, item mix additional supported by greater realisations throughout the quarter. The enhanced spreads resulted in greater Ebitda margin, which also doubled y-o-y to 27.2% throughout the quarter.
The business decreased consolidated net debt by Rs 1,099 crore in the quarter. Consolidated net debt to equity stood at 1.29x at the finish of the quarter versus 1.43x at the finish of September 2020 quarter. Net debt to Ebitda stood at 3.53x against 4.73x at the finish of Q2FY21.
On the outlook, JSW Steel stated that a broad primarily based financial recovery is underway in India with business enterprise sentiments enhancing substantially more than the current months. “There has been a strong growth in the automotive sector, notably in PV and 2-wheelers, and tractors due to strong rural demand. The recovery in residential real estate and continued traction in commercial real estate is a bright spot, with scope for structural revival of the sector,” it stated in a statement.