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  • 25 Oct 2022
  • ICICIdirect Research

JSW STEEL REPORTS MUTED PERFORMANCE DUE TO SHARP FALL IN STEEL PRICES

JSWSTEEL - 996 Change: 6.60 (0.67 %)

News:

 For Q2FY23, JSW Steel reported quarterly saleable steel sales volumes of 5.01 Million tonnes (MT), up 24% QoQ and 32% YoY, higher than our estimate of 4.85 MT. For the quarter, JSW Steel standalone operations reported EBITDA/tonne of Rs 3477/tonne, down 85% YoY and 58% QoQ, lower than our estimate of Rs 4800/tonne. For Q2FY23, JSW Steel reported consolidated topline of Rs 41778 crore, up 29% YoY and 10% QoQ (our estimate of Rs 37830 crore). Standalone EBITDA for the quarter stood at Rs 1742 crore, down 48% QoQ and 80% YoY, lower than our estimate of Rs 2328 crore. Standalone EBITDA came in lower than our estimate on the back of lower than expected EBITDA/tonne. Subsidiaries performance also came in muted during the quarter, and as a result of which consolidated reported EBITDA came in notably lower than our estimate. Consolidated EBITDA for the quarter stood at Rs 1752 crore (down 83% YoY and 59% QoQ), lower than our estimate of Rs 3111 crore. Consolidated EBITDA margin for the quarter stood at 4.2% as compared to 32.0% in Q2FY22 and 11.3% in Q1FY23 (our estimate of 8.2%).

View:

 JSW Steel reported a muted performance in Q2FY23; wherein it reported a net loss both for the standalone as well as consolidated operations. Lower than expected EBITDA/tonne for the standalone operations as well as muted performance from subsidiaries led to a subdued performance for JSW Steel. On the back of muted operating margins, both standalone operations as well as consolidated operations reported net loss for the quarter. For Q2FY23, JSW Steel’s standalone operations reported a net loss of Rs 91 crore and JSW Steel’s consolidated operations reported a net loss of Rs 915 crore during the quarter. During the quarter, one-off items such as net realisable value (NRV) provisions and inventory losses, mark-to-market unrealised loss on outstanding foreign currency loans and payment of export duty on exports impacted JSW Steel’s operational performance.

Impact:

Negative.