On the back of a strong recovery in steel demand, JSW Steel reported record numbers for the three months of October-December. The net profit of Mumbai-based company increased nearly 14 times on a year-on-year basis to Rs 2,669 crore.
Consolidated revenue from operations surged 21% y-o-y to Rs 21,859 crore. Overall sales volumes were slightly lower by 2% y-o-y and 5% sequentially at 3.95 million tonnes, due to lower opening inventory driven by strong sales in the second quarter.
However, domestic sales of 3.48 million tonne is the second best quarterly sales on record, up 13% y-o-y and 16% quarter-on-quarter on the back of strong momentum in domestic economy.
“Various high frequency economic indicators are better than the initial expectations pointing to a robust recovery. Growth in passenger vehicles and motorcycle sales, railway freight traffic, and electricity consumption is also strong,” the company said in a statement.
The company recorded highest ever quarterly sales of flat products, propelled by strong demand of coated products. Automotive steel sales increased by 57% y-o-y, while India’s domestic automotive production grew by 16% y-o-y. Consequently, exports were much lower during the quarter.
“The domestic steel industry witnessed sharp demand recovery driven by restocking and higher demand from automotive, machinery, construction and infrastructure sectors aided by increased government spending. Specific policy initiatives such as production linked incentive schemes to encourage manufacturing in India and targeted stimulus packages to the MSME sectors,” the statement said.
As the domestic steel demand rebounded from recent lows and gained momentum, the company further calibrated its export volumes to 12% of the total sales at 0.47 million tonnes, in order to service the Indian market. The company reduced inventories by 0.47 lakh tonnes during the quarter.
The company also reported strong growth in consolidated Ebitda (earnings before interest, tax, depreciation and amortisation) during the quarter which surged 142% y-o-y to Rs 5,946 crore. “There has been a strong growth in the automotive sector, notably in passenger vehicles and 2-wheelers, and tractors due to strong rural demand. The recovery in residential real estate and continued traction in commercial real estate is a bright spot, with scope for structural revival of the sector,” it said in a statement.