JSW Steel Ltd, India’s second-largest steel manufacturer, on January 21 reported a consolidated net profit of Rs 4,357 for the quarter ended December 2021, registering a 62.5 percent year-on-year (YoY) growth from Rs 2,681 crore.
On a sequential basis, the profit declined 39 percent from Rs 7,170 reported in the previous quarter.
The steel maker's consolidated revenue during the September-December period stood at Rs 38,071 crore, up 74 percent from Rs 21,859 crore recorded in the year-ago quarter.
Sequentially, the revenues have increased 17 percent from Rs 32,503 crore logged in the previous quarter.
The steel producer’s performance was boosted by a significant improvement in price realisation as compared to the year-ago quarter. The benefits of the price hikes undertaken over the course of the past few quarters have been reflected in the operating performance too.
On a sequential basis, however, higher input costs and slower price hikes have impacted the margins.
“Various government initiatives such as National Infrastructure Pipeline, Gati Shakti Program, and PLI schemes across sectors are supporting investment and manufacturing growth in India”, the management said.
It added further that construction, infrastructure and renewable energy segment should witness healthy pickup while residential real estate continues its recovery, aided by lower interest rates.
Sales Volume & Realisation
The total sales volume during the quarter was at 3.91 MT (million tonnes), down 1 percent YoY from 3.95 MT and up 2 percent from 3.83 MT in the previous quarter, aided by new capacity addition at its Dolvi plant.
The sales volume of value-added products was higher by 4 percent YoY at 44 percent but down 2 percent from the previous quarter.
Speciality product volume stood at 18 percent compared to 17 percent during last year and 14 percent in the second quarter of this year.
The share of other products declined to 38 percent from 43 percent in the quarter a year ago and 40 percent in the preceding quarter.
Share of domestic sales volume to OEMs was 55 percent, retail sales constituted 30 percent of domestic volumes and the rest came from the auto segment.
Domestic sales at 3.10 MT were up 31 percent QoQ as domestic demand picked up post monsoon season; exports were consequently reduced. On a YoY basis, they are down 11 percent.
The company was able to improve its share of value added and special products in the overall sales mix at 62 percent (vs. 60 percent in Q2FY22), driven by increased domestic sales to renewable energy, appliances, and tinplate segments.
Net sales realisation during the quarter increased by 2% QoQ, driven by improved sales mix (VASP at 62% vs. 60% QoQ) and higher prices
The operating costs were higher due to higher coking coal prices and higher power and fuel expenses. The company had to make provisions towards mining premiums and royalties of Rs 1,056 crore due to revision in IBM (Indian Bureau of Mines) prices.
The cost of raw materials as percentage of operating revenues increased by 7 percent YoY to 47 percent during the quarter. On a sequential basis, the increase was even higher at 9 percent.
Power & fuel cost as a percent of operating revenues was also higher by 2 percent on-year and sequential basis to 9 percent.
The other income was lower in this quarter compared to the previous one as there was a one-time gain of Rs 702 crore in the previous quarter on account of re-measurement of optionally fully convertible debentures held by the company in one of the Joint Ventures.
The higher operating costs impacted the EBITDA margins for the quarter which came in at 24 percent compared to 27 percent in the same quarter a year ago and 32 percent in the previous quarterThe JSW Steel stock settled at Rs 666.65, down 2.32 percent from its previous close on the BSE on January 21. The stock has generated returns of 70 percent over the past one year and gained 1.6 percent in the last one month.