JSW Steel Q1 Preview: Earnings To Grow Despite Sectoral Headwinds

Brokerages expect volume growth to drive revenues as realisations may decline with lower metal prices.

The company's standalone realisations may decline by Rs 1,550 per tonne sequentially, led by a drop in ferrous prices that may be slightly offset by higher automotive contract prices, according to ICICI Securities Ltd.

The Ebitda per tonne is expected to decline by 33% YoY to Rs 7,890 per tonne, led by lower realisations and high-cost coking-coal inventory, Kotak Institutional Equities said.

JSW Steel is expected to report higher volumes after the 5-million-tonne expansion of the Dolvi plant in Maharashtra was fully ramped up within a year. Consolidated saleable steel volumes may grow 38% to 5.6 MT in the first quarter, according to Motilal Oswal Financial Services Ltd. The company's consolidated crude-steel production grew 11% YoY to 6.43 MT in the first quarter.

Prices of key input raw materials, including coking coal and iron ore, have cooled off this quarter. However, because steel manufacturers keep 60–90 days' worth of inventory on hand, Motilal Oswal predicted that the benefit of lower raw-material costs for steel companies would not be apparent until the second quarter.

JSW Steel is the only company among steel majors that is expected to post positive year-on-year growth of 7.5% in net profit in the April-June quarter. Tata Steel Ltd. and Jindal Steel and Power Ltd. are expected to post net-profit declines of 96.5% and 50.8%, respectively, according to Bloomberg estimates.