JSW Steel Profit Soars 225.3% to 5,279 Crore Rupees in Second Quarter
Key Facts
JSW Steel said net profit attributable to owners of the parent rose 225.3% year on year to 5,279 crore rupees in the quarter ended September 30, compared with 1,623 crore rupees a year earlier. The profit came alongside record sales, while Moneycontrol reported that the stock rose 6% to 1,260 rupees on October 26. The company announced its results on October 23, so the share rise came after the announcement day, not at the time of the announcement. On that day, the stock closed down 2.83%, according to Investing.com. Trading over the two sessions reflected investors’ mixed response to strong operating volumes on one hand and selling prices and raw material costs on the other.
Operating EBITDA margin was 18.57% in the second quarter, compared with 15.76% in the year-earlier period, according to Reuters. But raw material costs rose 12.5%, and total expenses climbed 12% to 481.68 billion rupees. The figures show that margin improvement coincided with a marked increase in production inputs and overall expenses. One material the company monitors is coking coal, whose price rose 10 dollars per ton during the September quarter. That was less than the increase the company had expected for the period, of between 12 and 15 dollars per ton.
Reuters said JSW Steel benefited from its mix of flat steel products, whose prices remained more resilient than those of long steel. This came amid healthy demand from the automotive, pipe and construction sectors, which support demand for flat products. At the same time, the company faces another expected increase in coking coal costs, with Chief Executive Jayant Acharya saying the price is likely to rise 25 dollars per ton from October to December. That puts raw material costs at the center of attention for the company’s performance next quarter. Acharya also said the company is looking to use more domestic coking coal, which could provide a cost advantage.
On demand, Acharya forecast domestic steel demand growth of 7-8% in fiscal 2027, supported by construction and infrastructure activity. The company kept its fiscal-year production guidance at 29.75 million tons and sales at 28.6 million tons, excluding JSW-JFE Steel Ltd. from both targets. These targets put production and sales volumes in the context of the company’s outlook for the domestic market. This comes as the company prepares for an expected increase in coking coal costs during the October-to-December quarter. Acharya said increasing the use of domestic coal is part of the company’s focus on achieving a cost advantage.
Moneycontrol reported price targets from three brokerages: CLSA set a target of 1,500 rupees with an Outperform rating, while Jefferies set a target of 1,650 rupees with a Buy rating. JM Financial set a target of 1,470 rupees with a BUY rating. These estimates follow the second-quarter results and the stock’s move on October 26. The stock had fallen in the October 23 session following the results announcement, according to Investing.com, before rising on the day cited in Moneycontrol’s report. The announced operating outlook for fiscal 2027 remains at the production and sales levels the company maintained.