JSPL Q1 PAT spurts to Rs 2,516 cr

The steel major's consolidated net profit (from continued operations) surged 967.29% to Rs 2,515.71 crore on 62.78% jump in total revenue from operations to Rs 10,609.50 crore in Q1 June 2021 (Q1 FY22) over Q1 June 2020 (Q1 FY21).

Profit before tax soared 818.11% to Rs 3,409.62 crore in Q1 FY22 as against Rs 371.37 crore in Q1 FY21. The Q1 result was declared during market hours today, 10 August 2021.

The company reported a record first quarter steel production of 2.01 million tonnes as against 1.67 million tonnes in Q1 FY21. Sales stood at 1.61 million tonnes in Q1 June 2021 compared with 1.56 million tonnes in Q1 June 2020.

Despite adverse market conditions due to second wave of COVID-19 and ensuing lockdowns, Jindal Steel & Power (JSPL) has been able to post resilient set of numbers in Q1 FY22. While domestic demand was subdued during the quarter, buoyant export markets continued to provide support with exports accounting for 34% in Q1 FY22. Share of exports would have been higher in the absence of logistical challenges posed by unfavorable weather leading to congestion at ports.

Volume growth coupled with upward momentum in steel prices in Q1 FY22 resulted in standalone net revenues rising by 65% Y-o-Y to Rs 10,385 crore. However, during the quarter long steel prices were relatively subdued compared to flat steel prices, which were also boosted by buoyant export markets. The quarter also witnessed sharp rise in input costs, impact of which was compounded by exhaustion of low cost iron ore inventory. Although standalone EBITDA of Rs 4,524 crore was up Y-o-Y (year-on-year), it declined 7% Q-o-Q (quarter-on-quarter), due to drop in sales volume and lower benefit accruing from iron ore compared to prior quarter.

Continued cash generation, declining finance cost, lower capex and debt associated with Jindal Power (JPL) moving out of JSPL's consolidated books have all contributed to continued deleveraging in Q1 FY22. Consolidated net debt has declined further to Rs 15,227 crore in Q1 FY22 from Rs 22,146 crore in March 2021. Conclusion of JPL divestment (now accounted as asset held for sale) will result in net debt declining further, taking JSPL a step closer to its vision of becoming a net debt free company. Additionally, the divestment would meaningfully enhance JSPL on ESG metrics, by reducing its carbon footprint by more than half (at full utilization).

The quarter marked exemplary performance by all businesses including Steel and Overseas mines and minerals businesses, which resulted in JSPL reporting consolidated net revenues of Rs 10,610 crore, rising 63% Y-o-Y and EBITDA of Rs 4,539 crore. Aided by the strong operating performance amidst challenging market conditions, JSPL reported a consolidated PAT (continuing operations) of Rs 2,516 crore. The company's singular focus on deleveraging has resulted in consolidated net debt reducing to Rs 15,227 crore [Ex-JPL]. The balance sheet continues to strengthen further with net debt to EBITDA improving to 0.96 (from 1.53x in the previous quarter).

JSPL is an industrial powerhouse with a dominant presence in steel, power, mining and infrastructure sectors.

Shares of JSPL dropped 4.14% to Rs 400.75 on BSE. The stock has traded in the range of Rs 396.35 to Rs 419.65 so far.

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