JSW Steel Q3 PAT up 63% YoY to Rs 4,357 cr on robust domestic operations

Strong revenue stream led by automotive, solar, appliance segments push up bottom line

Sajjan Jindal-led JSW Steel reported a consolidated net profit of Rs 4,357 crore in the December quarter, up 63 per cent from corresponding period last year on the back of strong revenues mainly from India operations.

The net sales of the company in the period under review stood at Rs 37,462 crore, up 74 percent from the same period last year because of increased domestic sales in automotive, solar and appliance segments.

Overall exports were moderated to 15 percent of sales during the quarter as against 30 percent of sales in Q2 FY2022.

As per Bloomberg estimates, the company’s topline was expected to be at Rs 36,529 crore, while the bottomline was seen at Rs 4,689 crore.

The Mumbai-based steel producer registered quarterly operating earnings before interest, taxes, depreciation and ammortisation (EBITDA) of Rs 9,132 crore, with an EBITDA margin of 24 percent.

Alongside, a total tax expense of Rs 1,745 crore ate into the company’s earnings in turn lowering the net profit.

The company’s consolidated net debt/equity (post consolidation of BPSL) stood at 1.02x at the end of the quarter as against 0.92x at the end of Q2 FY2022 and net debt/EBITDA stood at 1.73x as against 1.58x at the end of Q2 FY2022, said JSW Steel release.

With regard to capex spent during the December quarter, JSW Steel said the company’s capex stood at Rs 4,026 crore and Rs 10,353 crores for Apr-Dec FY22, against a total planned capex spend of Rs 18,240 crore for FY2022. During Q3 FY2022, BPSL incurred a capex of Rs 180 crore.

The five million tonne brownfield expansion at Vijayanagar is progressing well, with civil works underway at the site, said the company. "Long lead-time items have been ordered, and Letters of Credit established. The project is expected to be completed by FY2024," it said.

The downstream expansion projects at Vijayanagar, Vasind and Tarapur are in advanced stages of implementation, with several lines having been commissioned in 9M FY2022, it added.

Alongside, the Indian Bureau of Mines (IBM) revised upward the already published average selling price of iron ore for the month of September and October 2021.

Based on a legal opinion obtained, the company believes that the methodology used by IBM for arriving at such revised average selling price by excluding certain bona fide sale transactions of iron ore by the company is not in accordance with the provisions of the Mineral Conservation and Development Rules, 2017.

Accordingly, JSW Steel has contested the same before the Honourable High Court of Odisha and the matter is sub-judice.

However, the company, as a matter of prudence, has recognized the provision towards Mining Premium and Royalties payable based on such revised average selling prices published by IBM, and the impact on profit and loss for the quarter ended 31 December 2021 is Rs 1,056 crore.

In the domestic market, during the quarter, BPSL became a subsidiary with effect from 1st October 2021, as JSW Steel increased its stake in BPSL to 83.28 percent from 49 percent earlier on conversion of Optionally Fully Convertible Debentures (OFCDs).