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    JSW Steel

    JSWSTEELGood
    Metals & Mining·21 Oct 2021
    Management Summary

    JSW Steel delivered record quarterly results with highest-ever revenue, EBITDA and PAT despite severe coking coal price volatility ($400/tonne) and monsoon-subdued domestic demand. The commissioning of the 5 MT brownfield expansion at Vijaynagar - India's largest blast furnace - was a landmark event. BPSL equity conversion to 83.28% will bring consolidation from Q3. H1 FY22 EBITDA and PAT already exceeded full FY21, though management cautioned about elevated cost pressures and contemplated energy surcharges.

    Highlights

    9

    • Highest ever consolidated quarterly revenue; highest EBITDA of Rs.10,417 crores; highest PAT of Rs.7,179 crores

    • Consolidated EBITDA/tonne at Rs.26,172; standalone EBITDA/tonne at Rs.22,900 (down Rs.3,374 QoQ due to cost pressure)

    • Crude steel production at 4.1 MT (91% utilization); consolidated production including JVs at 5.07 MT

    • Exports at 38% of sales, up 22% QoQ as domestic demand was monsoon-subdued

    • VASP sales at 60%; retail, branded, solar and appliance sales all up significantly

    • BPSL OFCDs converted to equity on Oct 1; JSW now holds 83.28% - consolidation from Q3 FY22

    • 5 MT brownfield expansion at Vijaynagar - largest blast furnace in India commissioned

    • H1 EBITDA of Rs.20,691 crores exceeds full FY21 EBITDA of Rs.20,141 crores

    • Coking coal prices spiked to $400/tonne; energy surcharge being contemplated

    Concerns

    1

    • Coking coal prices at unsustainable $400/tonne levels

    What Changed2

    vs Q4 FY25

    Tone shiftMixed → GoodGuidance items6 → 3 (-3)

    Key financials

    Single quarter

    12 metrics
    1. 01Consolidated EBITDA₹10,417 Cr
    2. 02Consolidated EBITDA Margin32%
    3. 03EBITDA/tonne (consolidated)26,172 Rs/tonne
    4. 04EBITDA/tonne (standalone)22,900 Rs/tonne
    5. 05PAT₹7,179 Cr

    Segment breakdown

    US Operations
    61.4 Mn EBITDA
    Italian Operations
    6.1 Mn EBITDA
    BPSL
    ₹2,022 Cr EBITDA23,000 Rs/tonne EBITDA/tonne
    Indian Subsidiaries
    ₹1,194 Cr EBITDA
    List

    Guidance & targets

    3
    CategoryTargetPriority
    Volume
    Dolvi Expansion Incremental
    1.5 MT production, 1.4 MT sales
    		High
    Demand
    India Steel Demand
    ~110 million tonnes
    		Medium
    Cost
    Coking Coal Cost Outlook
    Some correction expected from $400 levels
    		Low

    Risks & concerns

    4
    RiskSeverity

    Coking coal prices at unsustainable $400/tonne levels

    Energy crisis globally drove coking coal to $400; management contemplating energy surcharge to pass through costs — Management acknowledged

    high

    Chinese steel demand falling - down 24% in September

    Chinese demand down in Jan-Sep due to property sector weakness and common prosperity policies; rest of world strong — Management acknowledged

    medium

    Half million tonnes of accumulated inventory due to port logistics

    Container availability, shipping costs, port congestion elevated inventories; Rs.8,200 crore working capital buildup — Management acknowledged

    medium

    Indian iron ore prices not reflecting global decline

    Global iron ore fell 50% from $230 to $120 but Indian prices remained elevated, hurting cost competitiveness — Management acknowledged

    medium

    Q&A highlights

    3

    “BPSL EBITDA Rs.2,022 crores, EBITDA per ton Rs.23,000...lot of things which we have done to reduce the cost further. BPSL should do well going forward”

    BPSL achieving Rs.23,000 EBITDA/tonne similar to JSW standalone validates the turnaround; cost reduction from PCI and coke oven coal plant

    asked by Pinakin (JP Morgan)

    1 min read4 chapters

    Detailed Narrative

    01

    Record Financial Performance

    JSW Steel delivered highest-ever quarterly results across all metrics: consolidated EBITDA of Rs.10,417 crores (32% margin), PAT of Rs.7,179 crores. H1 FY22 EBITDA of Rs.20,691 crores already exceeds full FY21 EBITDA of Rs.20,141 crores. H1 PAT of Rs.13,079 crores vs FY21 full-year PAT of Rs.7,873 crores. Standalone EBITDA/tonne at Rs.22,900 declined Rs.3,374 QoQ due to severe cost pressures.

    02

    Vijaynagar 5 MT Expansion Milestone

    India's largest blast furnace commissioned at Vijaynagar as part of 5 MT brownfield expansion - first time 5 MT expansion commissioned at once in India. Smooth start-up with quick ramp-up expected. Incremental 1.5 MT production and 1.4 MT sales guided. CGL-2, colour coated line, and coke oven to follow in Q3-Q4 FY22. Chairman Sajjan Jindal elected as World Steel Association Chairman.

    03

    BPSL Consolidation and Turnaround

    BPSL OFCDs converted to equity on October 1, taking JSW holding to 83.28%. BPSL delivered Rs.2,022 crore EBITDA and Rs.1,448 crore net profit in Q2. EBITDA/tonne at Rs.23,000 converging with JSW standalone. Rs.1,800 crore debt prepaid. BPSL will be fully consolidated from Q3 FY22 with ~Rs.7,200 crore remaining debt.

    04

    Cost Challenges and Inventory Buildup

    Standalone costs rose 19% QoQ vs 5% NSR increase, driven by coking coal spiking to $400/tonne. Indian iron ore prices didn't decline proportionally to 50% global drop from $230 to $120. Working capital increased Rs.8,200 crores in H1 with half million tonnes inventory accumulated from port logistics constraints. Management contemplating energy surcharge mechanism.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.