Jai Balaji Q3 results: Net up 740% to Rs 234 cr, plans Rs 1,000 cr capex

Steel major Jai Balaji Industries Ltd on Monday announced a 740 per cent rise in net profit for the third quarter ended December 2023 at Rs 234.6 crore over the corresponding quarter in 2022, despite flat quarterly revenue of Rs 1539 crore.

The company, which posted a Rs 28 crore net profit in the third quarter of the 2022-23 fiscal, attributed the surge in profit to its focus on higher-value products and cost efficiency.

Jai Balaji also disclosed plans to invest Rs 1,000 crore over the next 12-18 months to ramp up the share of value-added products to 80 per cent from the current 50-55 per cent.

The expansion will propel the company's revenue to Rs 9500-10,000 crore in FY25-26 with an EBIDTA of 18-20 per cent, officials said.

Chairman Aditya Jajodia hailed the quarter as the "best in profitability" in the company's history, marking a strong turnaround.

He highlighted the significance of the Rs 1,000 crore investment, the first in a decade due to financial and market-driven slowdown in the past.

The company has already invested Rs 350 crore, with the remainder to be deployed over the next 12-18 months.

Jajodia stated that the investments will prioritise cost-efficiency projects and specialised products, including ductile iron pipes and special-grade ferro alloys.

He detailed the firm's remarkable turnaround from a stressed asset in 2011 to its current strength, crediting it to cost-cutting measures and a renewed focus on value-added products.

The company has significantly reduced its debt from Rs 3400 crore a decade back to Rs 560 crore now, which is expected to be cleared within 18 months.

"The upcoming expansion will be funded through internal accruals," Jajodia said.

"We have about a debt of Rs 560 crore which will be debt-free in 18 months and the Rs 1000 crore will be also funded from internal accruals," the conservative company promoter said.

While Jai Balaji operates four plants, its Durgapur facility in West Bengal contributes 75 per cent of revenue. The expansion is expected to further increase Durgapur's share to 80-90 per cent, GM Finance Raj Kumar Sharma said.

The company's ongoing expansion, its finished steel product capacity will move up from 0.75 million tonnes to 1.3 million tonnes.

Despite challenges posed by the Red Sea conflict and rising freight costs, Jajodia noted that exports have remained unaffected due to the specialised nature of their products.

Jajodia expressed confidence in maintaining an EBIDTA margin of 18-20 per cent despite weak global steel prices and cheap imports.

He said the company's focus on bottom-line improvement and debt reduction to ensure resilience against future market fluctuations.

Jajodia announced that the majority of the company's dues to Asset Reconstruction Companies (ARCs) have been cleared, with a complete settlement expected by February 2024.