JSW Steel joins Rs 1.5-trillion m-cap club, zooms 57% in a month

JSW Steel has joined the elite club of companies with Rs 1.5-trillion market capitalization (market-cap) on the BSE, after its share price rallied 14 per cent to hit an all-time high of Rs 638.90 in intra-day trade on Thursday.

With the market-cap of Rs 1.54 trillion at 2 pm, JSW Steel stood at 24th position in overall market-cap ranking, the BSE data shows. Today, JSW Steel surpassed Bajaj Finserv, Sun Pharmaceutical Industries and HDFC Life Insurance Company in market-cap ranking during intra-day trade.

In the past one month, JSW Steel outperformed the market by surging 57 per cent as compared to 0.81 per cent decline in the S&P BSE Sensex. The company today informed the stock exchanges that it achieved crude steel production of 4.19 million tons in January-March quarter of the financial year 2020-21 (4QFY21), registering a growth of 2 per cent sequentially and 6 per cent on year on year (YoY). The company’s average capacity utilisation improved from 91 per cent of Q3FY21 to 93 per cent for Q4FY21.

The company said that even though the average capacity utilisation improved from 66 per cent in Q1FY21 to 93 per cent in Q4FY21, the crude steel production for FY2020-21 was lower by 6 per cent mainly due to disruption in production caused by the outbreak of COVID-19 in Q1FY21.

Brokerage firm Motilal Oswal Securities raised its FY22-23E EPS for JSW Steel by 42-48 per cent to factor in improved steel price outlook and accretion from the acquired assets of Bhushan Power and Steel (BPSL). The brokerage firm reiterates a Buy on JSW Steel as the best play on volume growth in the Indian steel sector.

Over FY21-23E, we estimate 16 per cent volume CAGR (excluding BPSL), which should drive 22 per cent/37 per cent EBITDA/EPS CAGR. We also estimate net debt to fall by 26 per cent over FY21-23E to Rs 48,300 crore (1.7x FY23E EBITDA) despite an ongoing capex program to expand its upstream and downstream Steel capacities, it said.

Meanwhile, in a separate regulatory filing, JSW Steel, on March 31, said that the Moody’s Investors Service reaffirmed the Company’s rating at Ba2 with outlook revised to stable from negative.

"The rating affirmation and outlook change to stable are driven by a solid recovery in JSW's operating performance in the third quarter of fiscal year ending March 2021. We believe JSW will sustain the improvement over the next 12-18 months, enabling a recovery in its financial metrics to levels more appropriate for its Ba2 CFR," said Kaustubh Chaubal, a Moody's vice president and senior credit officer.

"The rating action also reflects JSW's acquisition of BPSL, which we view as strategic to the business. BPSL's value-added product offering and proximity to JSW's iron ore mines will further strengthen the company's business profile while adding scale," adds Chaubal, who is also Moody's lead analyst on JSW.