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JSW Steel Q3 preview | Consolidated PAT to soar 113% YoY on higher realisations

Analysts expect the company’s consolidated operating margin to expand 70-427 basis points on-year to 27.8-31.5 percent in the third quarter ended December 31.

Mumbai / January 21, 2022 / 07:35 AM IST
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JSW Steel, India’s second-largest steel manufacturer by market capitalization, is expected to report a 113 percent year-on-year growth in consolidated net profit to Rs 5,719 crore for the quarter ended December, according to an average of estimates by five brokerage firms polled by Moneycontrol.

The steelmaker will announce its December quarter earnings later today.

The steel producer’s performance will be boosted by the significant improvement in price realization as compared to the year-ago quarter. Brokerage firm Prabhudas Lilladher expects realization per tonne of the company to rise 52 percent on-year to Rs 75,204, whereas operating profit per tonne is seen higher by 37.1 percent.

The benefits of the price hikes undertaken by the company over the course of the past few quarters will be reflected in the operating performance too. The company’s consolidated operating profit is expected to rise 68 percent on-year to Rs 9,996 crore in the reporting quarter, Moneycontrol poll showed.

Analysts expect the company’s consolidated operating margin to expand 70-427 basis points on-year to 27.8-31.5 percent in the reporting quarter.


That said, on a sequential basis, JSW Steel’s consolidated operating margin is likely to shrink 57-580 basis points reflecting the impact of higher input costs and slower price hikes. Sequentially, the company’s operating profit per tonne is also expected to decline 18.6 percent to Rs 22,370, said brokerage firm Motilal Oswal Financial Services in a preview note.

“We expect the raw material cost to increase sequentially with an increase coking coal costs offset by lower iron ore prices factoring a one-month consumption lag,” Kotak Institutional Equities said in a preview note.

JSW Steel’s consolidated revenues are likely to surge 59 percent on-year to Rs 34,769.5 crore for the December quarter, as per the Moneycontrol poll. The growth in the company’s topline will entirely be driven by the rise in realization per tonne as volumes are expected to be flat or decline marginally on a year-on-year basis.

“We expect JSW Steel to report a volume increase of 2% QoQ, but down 1% YoY, in 3QFY22 with ramp-up at Dolvi plant, but partly offset by weakness in domestic demand and lower exports,” Kotak Equities said.

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Chiranjivi Chakraborty
first published: Jan 21, 2022 07:35 am
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