JSPL slips after Q3 PAT drops 23% YoY

Jindal Steel & Power (JSPL) fell 1.72% to Rs 415.10 after the company's standalone net profit from continuing operations declined 23% to Rs 1,714 crore despite 37% increase in net revenue to Rs 11,955 crore in Q3 FY22 over Q3 FY21.

The decline in profitability was due to lower operating profit and higher tax expense partially offset by lower finance costs. EBITDA in Q3 FY22 was Rs 3,168 crore (down 19% YoY) as impact of higher realisations was more than offset by sharp rise in raw material cost, lower steel and pellet sales.

During Q3FY22, JSPL reported steel sales (incl. pig iron) of 1.82 million tonnes, which were lower than production of 1.96 million tonnes due to logistical challenges encountered earlier and subdued domestic demand. Export share for JSPL declined to 23% during the quarter (vs. more than 40% share in the prior quarter). Higher internal consumption resulted in negligible external sales of pellets (8kt in Q3 FY22).

"After remaining subdued in 9M FY22, construction and infrastructure activities are expected to recover strongly in Q4 FY22 due to the combination of pent-up demand and government's push towards more infrastructure expenditure as we approach the end of the financial year.

The domestic steel industry however continues to grapple with the sharp rise in the coking coal prices. Premium Hard Coking coal has risen more than 3x so far in FY22. Rising seaborne iron ore price has also triggered increase in domestic iron ore prices in the recent weeks-.

However, supply of coking coal from captive mines in Mozambique and Australia coupled with iron ore from Kasia and Tensa mine should provide JSP some relief from rising cost headwinds and ensure continued availability, the company said in a statement.

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

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