- For September quarter of 2022, the company reported a consolidated loss of Rs 915 crore
- Global economy is slowing down, offset by growth in Indian Economy
- The company is concentrating its efforts on consumer-oriented businesses and a growing portfolio of Value Added and Special Products (VASP)
JSW Steel Result has been impacted by the drop in steel prices and lower exports. For the September quarter of 2022, the company reported a consolidated loss of Rs 915 crore, compared to a consolidated net profit of Rs 7,179 crore the previous year. The company’s total income increased to Rs 41,966 crores from Rs 33,449 crores during the previous year.
The revenue from operations was Rs 41,778 crore, with an operating EBITDA of Rs 1,752 crore. The company’s net debt to equity ratio is 1.04x, and its net debt to EBITDA ratio is 2.70x.
The IMF has highlighted risks to global growth caused by high inflation, policy tightening, and the ongoing conflict in Ukraine. Global growth forecast for 2022 remains unchanged, but for 2023 it has been reduced to 2.7% (-0.2%). In the United States, real disposable income is declining, affecting consumer demand, while high interest rates are hurting real estate. With energy shortages, high inflation, and rapid ECB tightening, Europe’s growth slowdown is likely to worsen in 2HCY22. Currency depreciation is harming Japan’s trade balance, as weak global demand keeps exports muted. In China, the restrained property sector, ongoing Covid lockdowns, and weakening global demand are weighing on growth. JSW’s business is impacted by the global macros.
However, among major economies, India has emerged as one of the highest Manufacturing and Services PMIs. On the back of strong tax collections, the government continues to prioritise infrastructure and manufacturing. With strong sales and new launches, the Indian residential real estate sector is continuing to grow. Automobiles are in high demand. Indian growth story is a big favourable for the company.
Consolidated sales (including BPSL) increased by 47% year on year, aided by contributions from BPSL and Dolvi Phase-II. Higher domestic sales account for the 30% QoQ increase. However, after the imposition of an export duty in May 2022, exports fell by -62% year on year and-37% quarter on quarter basis.
The company is concentrating its efforts on consumer-oriented businesses and a growing portfolio of Value Added and Special Products (VASP).
VASP volumes increased by 24%. VASP’s share of total sales remained greater than 50%. Auto sector supplies increased 52% year on year and 9% quarter on quarter. Sales in the Appliances sector increased by 23% year on year, while sales in the Renewables (solar & wind) segment increased by 78% quarter on quarter.
Costs were impacted by raw material pricing because the correction in raw material prices were less than the fall in steel prices, and finance costs increased 6% QoQ due to higher benchmark interest rates.
The company’s net debt was Rs 65,719 crore. Since 2014, it has successfully raised US$3.69 billion through global bond markets and issued the global steel industry’s first USD Sustainability Linked Bond in September 2021.
Galactik Views