JSW Steel Q4 Results: Profit Falls 26% On Exceptional Item; FY23 Capex Guidance Cut

JSW Steel Ltd.’s quarterly profit fell, missing estimates, on account of an exceptional item.

The steelmaker’s consolidated net profit declined 25.7% sequentially to Rs 3,234 crore in the quarter ended March, according to its exchange filing. That compares with the Rs 4,580.7-crore consensus estimate of analysts tracked by Bloomberg.

JSW Steel provided for an exceptional item of Rs 710 crore. It booked an impairment provisioning toward the value of property, plant and equipment, goodwill, other assets and accrual of resultant liabilities.

JSW Steel Q4 FY22 Highlights (QoQ)

• Consolidated revenue rose 23.2% to Rs 46,895 crore, against the Rs 43,943.9-crore forecast. This was driven by higher value-added steel volume and increase in net sales realisation.

• Operating profit rose 0.56% to Rs 9,184 crore, compared with the projected Rs 9,145.7 crore. Higher prices of iron ore, coking coal, steam coal and natural gas offset the increase.

• Ebitda margin contracted to 19.6% from 24%. Analysts had pegged the metric at 20.8%.

Shares of JSW Steel closed 0.57% lower before the results were announced compared to a 1.13% gain in the benchmark Nifty 50.

JSW Steel spent Rs 14,198 crore of capex during FY22 against the planned Rs 18,240 crore.

Seshagiri Rao, joint managing director, told BQ Prime that the company intends to spend a capex of Rs 20,000 crore for FY23 compared to the earlier planned Rs 22,000-23,000 crore.

The company’s consolidated net debt-to-equity stood at 0.83x at the end of the fourth quarter versus 1.02x as of December. Its net debt-to-Ebitda stood at 1.45x against 1.73x at the end of Q3.

During the reported quarter, the net debt reduced by Rs 9,662 crore.

JSW Steel’s board has approved raising of non-convertible debentures with warrants, which are convertible into or exchangeable with equity shares, for an amount not exceeding Rs 7,000 crore; and equity shares and/or convertible securities (other than warrants) for an amount not exceeding Rs 7,000 crore to QIBs.

JSW Steel’s board has approved a scheme of amalgamation between joint venture company Creixent Special Steels and JSW Steel Ispat Special Products into the company, according to a separate exchange filing.

CSSL holds equity investment in JISPL and is its holding company.

Pursuant to the completion of the amalgamation, there would no longer be a requirement for CSSL to exist as a separate legal entity. CSSL is also proposed to be amalgamated with JSW Steel.

According to the deal, JSW Steel will issue three fully paid-up equity shares of Re 1 each of JSW Steel to the equity shareholders of CSSL for every 2 held by such equity shareholders of CSSL.

It would issue one fully paid-up equity share of the company to the equity and preference shareholders each of JISPL for every 21 of Rs 10 each held by such equity shareholders of JISPL.