Sajjan Jindal-led JSW Steel reported a significant decline in its net profit for the quarter ending March 31, 2024. The steel giant recorded a 64.5% drop in net profit to Rs 1,299 crore, significantly missing street estimates due to escalating expenses and raw material costs. This compares to a net profit of Rs 3,664 crore for the same period in the previous fiscal year.
During the reporting quarter, JSW Steel’s revenue dipped 1.5% to Rs 46,269 crore from Rs 46,962 crore a year earlier. The company’s EBITDA also saw a sharp decline, falling 22.9% to Rs 6,124 crore from Rs 7,939 crore previously. Analysts had expected a net profit of Rs 1,661 crore on revenues of Rs 44,676 crore and EBITDA of Rs 6,155 crore, according to a Bloomberg consensus estimate.
JSW Steel attributed the profit decline to a rise in expenses, which climbed to Rs 44,401 crore from Rs 43,170 crore in the same quarter last year. The cost of raw materials consumed rose to Rs 24,541 crore from Rs 23,905 crore, and other expenses increased to Rs 7,197 crore from Rs 6,653 crore.
Consolidated crude steel production for the quarter dropped by 3% to 6.79 million tonnes compared to the same period last year, while capacity utilization at Indian operations decreased to 93% from 94% in the previous quarter. However, steel sales for the quarter stood at 6.73 million tonnes, reflecting a 12% increase quarter-on-quarter (QoQ) and a 3% year-on-year (YoY) rise. Despite this, domestic sales at 5.16 million tonnes were lower by 2% QoQ and 5% YoY due to elevated imports.
JSW Steel’s board recommended a dividend of Rs 7.30 per share for FY24, resulting in a total outflow of Rs 1,785 crore. Additionally, the board approved the acquisition of Minas de Revuboe Limitada (MDR) in Mozambique for $73.75 million. MDR owns a coking coal mine with reserves exceeding 800 million tonnes, marking a strategic move towards backward integration for captive sourcing of coking coal.
Despite the profit slump, JSW Steel’s shares ended 2.36% higher at Rs 907.30 on the BSE, making it the second-best performer among the 30 Sensex stocks. As of March 31, 2024, the firm’s net debt stood at Rs 73,916 crore, a reduction of Rs 5,305 crore from December 31, 2023, primarily due to healthy cash generation, release of working capital, and calibrated capex. JSW Steel continues to navigate a challenging market environment, balancing cost pressures with strategic investments aimed at securing long-term growth and stability.
