JSW Steel topline seen up but EBITDA fall to pull down PAT in Apr-Jun

20 Jul 2022

JSW Steel Ltd’s bottomline is seen falling in the June quarter as compared to the year-ago and previous quarters due to the impact of higher operating costs.

But the company’s volume growth is seen positive due to higher realisations and the low base of same quarter last year when renewed lockdowns had affected production across industries. Sequentially, though, it is expected to be lower.

Estimates by three brokerage firms peg JSW Steel’s consolidated net profit between 11 bln rupees and 18.4 bln rupees in Apr-Jun with the upper end of the range being lower than the year ago quarter’s number of 59 bln rupees and previous quarter’s net profit of 32.3 bln rupees.

The company’s consolidated net sales in the June quarter is estimated to be in the 382.4-400.7 bln rupee range, as compared to actual net sales of 284.3 bln rupees in the year ago period and 460.3 bln rupees in the previous quarter.

JSW Steel will declare its results for the Apr-Jun quarter on Friday.

According to brokerage Kotak Institutional Equities, JSW Steel’s volume will fall 20% on the quarter due to demand moderation from higher steel prices and lower exports post imposition of the export tax. But realisations are expected to increase 6% on the quarter “due to higher steel prices in the domestic markets.”

Analysts were expected a sequential rise in JSW Steel’s input costs due to increase in coking coal costs and these will only be offset marginally by lower iron ore prices.

Brokerage IDBI Capital Services said JSW Steel’s EBITDA (earnings before interest, tax, depreciation, and amortisation) was likely to decline by 45.9% on the year due to sharp rise in prices of key inputs.

It said the market would watch for volume guidance for 2022-23 (Apr-Mar), and capital expenditure update, by the company after it announces its Apr-Jun results.