- 22 Jul 2024
- ICICIdirect Research
JSW STEEL REPORTED MUTED Q1FY25 RESULTS...
JSWSTEEL - 1028 Change: -16.10 (-1.54 %)News: Total operating income on consolidated basis for Q1FY25 came in at ₹42,943 crore (up 2% YoY, down 7% QoQ) with steel sales volume of 6.12 MT (up 7% YoY, down 9% QoQ). Reported EBITDA for the quarter came in at ₹5,510 crore vs ₹6,124 crore in Q4FY24, largely attributed to decline in volumes and negative operating leverage. Standalone operations reported EBITDA/tonne of ₹8,399 vs ₹7,807 in Q4FY24 vs ₹9,860 in Q1FY24. Consolidated PAT for the quarter stood at ₹867 crore. Additionally, JSW’s board approved transferring under construction 30-million tons slurry pipeline project in Odisha to JSW Infrastructure for ₹1,700 crore.
View: Decline in sales volume during the quarter was mainly attributed to plant maintenance shutdowns at Dolvi and BPSL as well as rise in imports. With levels for growth, steel volumes are expected to improve in coming quarters which coupled with lower iron ore and coking coal cost (down US$ 23-28/tonne QoQ for Q2FY25) will substantially improve profitability going forward. The company is committed to achieve its production and sales volume target of 28.4 MT and 27 MT in FY25, respectively. With respect to slurry pipeline, it has signed a take or pay agreement with JSW Infra for 18 MTPA iron ore offtake at an annual outgo at ~₹ 1,320 crore. The move is aimed at prioritizing capex requirement for the Dolvi plant expansion, which is expected to yield a higher IRR. With strategic capacity expansion in place, favourable steel demand domestically and improved profitability in sight we retain our positive stance on the stock.
Impact: Positive