India: JSPL Q2FY’22 key takeaways

India’s leading steelmaker – Jindal Steel and Power Ltd (JSPL) yesterday announced its Q2FY’22 results in an investor’s conference call.

During Q2FY’22, the steel major, on a standalone basis, reported its highest-ever quarterly sales (including pig iron) at 2.13 million tonnes (mn t), up 32% q-o-q as against 1.61 mn t in the previous quarter. On an annualised basis, sales volume jumped 10% against 1.93 mn t in Q2FY’21.

The company’s crude steel production stood at 1.93 mn t in Q2FY’22, down 4% as against 2.01 mn t in Q1.

Meanwhile, on an annualised basis, production volumes increased 5% against 1.84 mn t in Q2FY’21.

The steel major is confident on achieving its yearly target of producing 8-8.5 mn t of steel with its resilient performance in H1 and in anticipation that demand from construction and infrastructure shall pick in the second half of the current fiscal.

• Exports more than 40% of total sales: The company’s export sales comprised more than 40% of total sales in Q2FY’22. Export volumes increased due to subdued demand in the domestic market during the seasonally weak second quarter marred by the monsoons. Total sales stood at 2.13 mn t in Q2FY’22.
• Steel prices likely to increase: JSPL is likely to increase INR 2,000/t in flat products and INR 1,000/t in long products for Nov’21 deliveries. Prior to this, in Oct, the steel major had raised flat steel products prices by INR 2,000/t and long products by INR 1,500/t, SteelMint learned from the company’s investor call.
• Additional capacities: The steel major has received an additional 1 mtpa consent to operate (CTO) for the Angul blast furnace (CTO of 4.25mtpa from 3.2mtpa currently), which will raise JSPL’s capacity to 9.6 mtpa.
• Impact of higher coking coal prices: Sharp increase in coking coal prices did not impact much on JSPL’s Q2 performance because the company had already booked at lower prices.However, with the uptrend seen in October coking coal prices (premium hard coking coal) touching beyond $400/t levels, the company may see lower margins.
  JSPL is further expecting the first shipment from its Russel Vale mine in Australia, which will provide relief from the rising coal prices.
• Company’s EBITDA at INR 4,519 crore: The EBITDA jumped by around 86% to INR 4,519 crore in Q2FY’22 in comparison to INR 2,435 crore in the same period of previous year. However, q-o-q, EDITDA remained flat against INR 4,524 crore in Q2FY’22.
• Company’s net debt declines in Q2: Improved working capital, strong operational cash flows, declining finance cost with lower capex have contributed towards continuous deleveraging in Q2. The net debt has declined further by INR 11,164 crore in 2QFY’22 (from INR 15,227 crore in Jun’21).