India’s biggest steel manufacturing company by market cap, JSW Steel posted its September quarter (Q2FY22) results on Thursday, 21 October 2021.
The company posted it’s highest ever quarterly revenues & profits in the September quarter. Company’s steel plants were running at 91% capacity in the current quarter.
The company’s consolidated revenues (topline) stood at ₹32,503 crore, up 69% year-on-year. Due to increasing steel prices, the company’s operating margins saw a sharp rise from 23% to 32% year-on-year. Due to strong revenue growth and improvement in margins, the company's consolidated net profit went up by a whopping 350% year-on-year and stood at ₹7,179 crore. The company’s revenue and profits were above street estimates.
After the second wave, steel production saw a good recovery in the current quarter.
Rising input prices, moderate Chinese production & healthy global demand outlook supported steel prices. Company’s margins also saw improvement on account of higher per unit realizations & better product mix.
Company believes the demand for Indian steel will remain strong in the second half of the financial year.
The management believes construction and infrastructure related activities can see some traction. The auto industry, which is facing a chip shortage crisis globally, can see some revival once the chip supply situation eases.
Lower interest rates and favourable policy environment will keep up the demand.
However, high inflation rate and any re-emergence of new cases could be some risk factors going ahead.
In the current financial year, the company's share price has risen by 44%. On the other hand, the Nifty50 index has risen by almost 24%, which shows that JSW Steel has outperformed the Nifty50.