Higher Volumes In H2 Likely To Boost JSW Steel's Profitability For FY25: CEO Jayant Acharya

JSW Steel Ltd. is set to see an overall increase in its profitability for FY25 despite the sharp decline in the Q2 Ebitda, according to the company’s managing director and chief executive officer Jayant Acharya.   

JSW Steel reported a 31% year-on-year drop in its Ebitda for the second quarter of the ongoing financial year at Rs 5,437 crore versus Rs 7,886 crore in the year-ago period. 

Speaking to NDTV Profit, Acharya said that he expected higher volumes in H2 to drive growth in the steelmaker's profitability.

“JVML (JSW Vijayanagar Metallics Ltd.) blast furnace has been commissioned, we have seen the BPSL (Bhushan Power & Steel Ltd) capacity being completed and so on. In the second half, our volumes will be much higher,” he said.

“Therefore we stand by whatever guidance we have given on our sales and production. An increase in volume will result in absolute Ebitda, which will further improve the company’s profitability,” the CEO added.

Acharya highlighted that the sharp decline in JSW Steel's Ebitda for Q2 was triggered by an expectational item worth Rs 342 crore. This item is a provisional amount that JSW Steel set aside as it received approval for the final mine closure and surrender of the Jajang Iron Ore Block. The provision amount pertains to the underlying carrying value of assets, inventory and site restoration liability.

“This mine was of a very low grade, which was not economically viable to use because the specifications did not result in a cost advantage. Therefore we decided to surrender it,” he said.

Acharya noted that the company has other mines that can give better quality iron ore.

“We have other mines that can produce better quality. Therefore, surrendering this mine will not have a negative impact but will actually have a positive impact because the quality of the alternate iron ore will be better,” he said.

The top executive said that the pricing of steel is expected to be better in the second half of the financial year due to the improving sentiment of the stock and commodity markets.

“Steel prices also reflect an improvement. We saw a similar improvement in India. The prices in October went up after bottoming out in September. H2 being a seasonally stronger half, we think the pricing will be better,” he explained.

Shares of JSW Steel Ltd. rose over 3% in intraday to touch a high of Rs 972.45 apiece on the BSE. The stock was seen trading 2.72% higher at Rs 969.44 versus benchmark Nifty 50's gain of 1.01% at around 11:50 am.