JSPL’s earnings prospects getting a boost from deleveraging, expansion

Domestic demand is generally muted in the monsoon-hit September quarter. Nevertheless, the company compensated it with higher exports. The share of exports increased to over 40% in Q2 of FY12 as compared to 38% in Q2 of FY12. Exports have become a major channel of sales and the management expects the momentum to continue.

The company also benefited from the increase in receipts. According to analysts’ calculations, net composite steel receipts grew 53% year-on-year. However, a fall in pellet prices meant that receipts were down 4% sequentially.

were on standalone revenue ₹13,261 crore, up 69% YoY and 28% sequentially. Rising cost of coking coal and iron ore means that operating performance has moderated on a sequential basis. Standalone Ebitda ₹4,512 crore was flat sequentially, up 85.6% year-on-year. Ebitda per tonne came in ₹21,216, down 25% sequentially due to increase in the cost of iron ore and coking coal, the inventory of low cost Sarada mine expiring in Q1 FY22. However, Ebitda per tonne was higher by 68% sequentially.

Consolidated Ebitda was helped by better performance of foreign coal and ₹4,594 crore was up 70% year-on-year and 1.4% sequentially.

However, an increase in steel receipts in the third quarter could offset the cost of inflation.

Meanwhile, the company has been declared the preferred bidder for the Kasia iron ore mine in Odisha, which has huge reserves of 278 million tonnes of iron ore and will benefit from the commencement of supplies.

Analysts at Antique Stock Broking Ltd said, “Steel profits will be aided by the ramp-up of volumes at Angul and the impact of higher coking coal costs partially offset by better profits from overseas coal mines in Australia, Mozambique and South Africa. Will happen.” .

The demand for steel in the country remains strong. In addition, the company will continue to expand its capabilities. JSPL has recently given approval to operate an additional 1 MTPA for Angul Blast Furnace (CTO of 4.25 MTPA from 3.2 MTPA at present), taking the company’s capacity to 9.6 MTPA (Million Tonnes Per Annum).

Strong operating cash flows, improving working capital, declining finance costs, and lower capital expenditure all contributed to continued deleveraging in Q2 of FY22.

Conclusion of the disinvestment of Jindal Power Limited, as an asset put up for sale, will result in a decline in net debt ₹3,000 crore, taking JSPL closer to its vision of becoming a net debt-free company by FY23, divestment of non-core businesses, de-leveraging of balance sheet (net debt/ EBITDA) at sub 1x FY23) and growth capex will drive earnings momentum going forward, he said.