Jindal Steel & Power Ltd.'s consolidated net profit fell 38% in the September quarter of the current financial year but surpassed the analysts' estimates.
The steel manufacturing company posted a profit of Rs 860.5 crore in the second quarter, according to an exchange filing on Wednesday. This compares with the Rs 813-crore consensus estimate of analysts polled by Bloomberg.
Jindal Steel Q2 Earnings Highlights (Consolidated, YoY)
Revenue fell 8.5% to Rs 11,213 crore versus Rs 12,250 crore (Bloomberg estimate: Rs 11,937 crore).
Ebitda decreased 3.7% to Rs 2,200 crore versus Rs 2,286 crore (Estimate: Rs 2,080 crore).
Margin expands 90 basis points to 19.6% versus 18.7% (Estimate: 17.4%).
Net profit fell 38% to Rs 860.5 crore versus Rs 1,390 crore (Estimate: Rs 813 crore).
Factors That Impacted Earnings
Jindal Steel's top line was mainly impacted by the correction in Indian steel prices that were driven by the seasonal effect and the slowdown in China in the second quarter. The industry also continues to face pressure from cheaper steel imports, which continued to rise 44% on a quarter-on-quarter basis.
Despite the revenue decline, Jindal Steel was able to maintain its margins due to cost-efficiency measures. The company's adjusted Ebitda per tonne stood at Rs 11,467 as compared to Rs 11,003 a year ago. Margins improved due to 2% lower costs of materials consumed, 66% lower stock-in-trade purchases, 64% lower finished goods inventory changes, and 7% lower other expenses on an annual basis.
The company's net profit was mainly impacted by higher current taxes of Rs 385.7 compared to Rs 13.1 a year ago.
Production & Sales
Jindal Steel's steel production stood fairly flat at 1.97 million tonnes. The company's steel sales stood 8% lower on an annual basis at 1.85 MT.
During the quarter, 40% of the company's sales distribution was for the infra segment, 31% for distribution and the balance in engineering building and automotive segments.
The company's value-added sales stood at 9.73 lakh tonnes as compared to 9.37 lakh tonnes a year ago. The overall share of value-added products stood higher due to the company's developments catering to higher growing sectors like shipbuilding, renewables and defence.
Capex
The company's total growth capital expenditure stands at Rs 31,000 crore currently, out of which 75% is for its Angul plant, while the rest is allocated towards coal mines, ACPP-II and new projects.
Debt
Jindal Steel's consolidated debt stood at Rs 12,464 crore, 19% higher mainly due to the Rs 2,221 crore of new debt raised by the company.
Shares of Jindal Steel settled 1.69% higher at Rs 951.85 apiece on the NSE, compared to a 1.12% advance in the benchmark Nifty 50. The results were declared after the market hours.
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