JSW Steel Q1 Results Review - Revenue Inline; Low Volumes, High Costs Dent Ebitda: Motilal Oswal

Motilal Oswal Report

JSW Steel Ltd. posted consolidated revenue of Rs 429 billion (+2% YoY/-7% QoQ), in line with our estimate of Rs 442 billion. Average sellig price for Q1 FY25 stood at Rs 70,168/tonne (-5% YoY and +2% QoQ).

Ebitda was Rs 55 billion (-22% YoY/-10% QoQ) versus our estimate of Rs 63 billion. The sequential decline was largely due to lower volumes and certain one-offs, including inventory valuation impact.

Ebitda/tonne stood at Rs 9,003 (-27% YoY/flat QoQ) versus our estimate of Rs 10,348.

Adjusted profit after tax stood at Rs 8 billion (-64% YoY/-35% QoQ) versus our estimate of Rs 14 billion. Weak operating performance and high tax outgo hit APAT.

Combined crude steel production stood at 6.35 mt (-1% YoY/-6% QoQ). Capacity utilisation at India operations was 87% and was hit by the planned maintenance shutdowns at Dolvi and BPSL. Steel sales volumes came in at 6.12 mt (+7% YoY/-9% QoQ). Export volumes declined 29% YoY and were 10% of India operations in Q1 FY25.

During the quarter, JSW Steel approved the transfer of 30 mtpa Slurry Pipeline undertaking in Odisha to JSW Infrastructure for Rs 17 billion.

Going forward, we expect JSW Steel’s domestic volumes to improve with increasing capacities, a better product mix, and export opportunities. With stable pricing, softening coal and iron ore costs, and improving operational efficiencies, we expect its Ebitda/tonne to improve going forward.

JSW Steel is trading at 6.2 times FY26E EV/Ebitda. We cut our Ebitda estimates by 7%/3% for FY25/FY26. We reiterate our Buy rating with a revised target price of Rs 1,030 (valued at seven times EV/Ebitda on FY26E).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.