JSL reports Q3FY22: Consolidated net profit jumps 160 pc YoY to Rs 442 cr

Its standalone PAT stood at Rs 372 crore in the period under review, up by 145 percent over Q3FY21.

On a consolidated basis, JSL recorded revenue of Rs 5,670 crores during Q3FY22, up by 58 percent over Q3FY21, while EBITDA stood at Rs 797 crore, up by 68 percent over Q3FY21.

In the third quarter of FY22, its standalone revenue stood at Rs 5,368 crore, up by 56 percent over Q3FY21, while standalone EBITDA was recorded at Rs 739 crore, up by 66 percent against the same quarter last year.

The company said its net external debt stood at Rs 1,762 crore as on December 31, 2021, with a robust debt/equity ~ 0.7.

On a sequential quarter basis, revenue and PAT in Q3FY22 grew by 11 percent and 3 percent respectively, in line with global commodity price increase.

"Even with 36 percent of domestic market captured by imports, JSL managed to maintain its profitability with better product mix and export planning. The interest cost stood at Rs 89 crore in Q3FY22 vs Rs 79 crore in Q2FY22 due to higher working capital utilization during the Q3," the company said.

On a 9-month basis, 9MFY22 PAT stood at Rs 1,006 crores, while EBITDA was Rs 2,030 crores. Sales volume was recorded at 742,123 tonnes and net revenue of the Company was Rs 14,025 crores.

Other key developments

JSL said it maintained its stronghold in the lifts and escalators segment.

"Riding on a bullish demand from the industrial and construction sectors, JSL also worked closely on various government infrastructure projects where stainless steel is a preferred alternative on a lifecycle costing approach," it added.

As part of its drive to increase its proportion of value-added products, JSL upped sales of its special grades (such as Duplex, Super Austenitic) and Chequered Plates.

The company supplied customized and value-added grades for Desalination Plant at Dahej, Assam Bio refinery, HURL Fertilizer plants, and fleet mode nuclear projects, among others.

However, shortage of semiconductor in the passenger vehicle segment and moderate demand from two-wheeler segment led to slight dip in the automotive sector during the quarter.

The pipe and tube segment also witnessed a minor decline owing to a lower than expected market demand and higher raw material prices.

Effect of CVD suspension

The impact of suspension of Countervailing duty (CVD) on stainless steel products from China and Indonesia in the Union Budget of 2021-22 has been damaging for the domestic industry, JSL said.

The revocation of these duties was upheld again in Budget 2022, announced on Feb 1, for the apparent reason of containing high prices of metals.

The decision to revoke duties will impact the survival of MSME stainless steel producers which comprise 30 percent of the manufacturing ecosystem, due to increased subsidised and dumped imports.

"The first nine months FY22 witnessed an 84 percent increase in stainless steel flat product import volumes compared to the average monthly imports in the last fiscal. Expectedly, bulk of the imports came from China and Indonesia, increasing by 230 percent and 310 percent on a year-to-date basis in 2021-22 as compared to monthly average in FY 2020-21," the company pointed out.

Between July 1, 2020 and January 1, 2022, prices of carbon steel scrap shot up by 92 percent from $279 per ton to $535 per ton, stainless steel scrap (304 grade) by 99 percent from euro 935 per ton to euro 1,860 per ton.

Other raw material prices like nickel, ferrochrome and iron ore lumps too saw about 50 percent-100 percent price increase.

Prices of raw materials continued to climb in Q3FY22; with nickel up by 23 percent, and ferro-chrome soaring by 122 percent on a YoY basis.

Prices of finished stainless steel products like cold rolled coil (304 grade) went up by 61 percent from July 1, 2020 to January 1, 2022.

However, this increase was less than that of Europe and USA where prices went up by 125 percent and 73 percent respectively. In China, prices went up by 41 percent.

Improvement in business-risk profile

JSL said CRISIL Ratings upgraded the rating of its long-term bank facilities to ‘CRISIL AA-/Stable’ from ‘CRISIL A+/Stable’ while reaffirming ‘CRISIL A1+’ rating to the short-term bank facilities.

"This upgrade underlines significant improvement in JSL’s business risk profile and a sustainable improvement in the operating efficiency of the company, driven by better per tonne EBITDA levels," the company said.

India Ratings and Research also upgraded JSL’s long-term issuer rating to ‘IND AA-’ with a stable outlook.

Mergers and acquisitions

"The Company’s petition for merger with JSHL is pending before Hon’ble NCLT, Chandigarh for approval," JSL said.

New product launches

In December 2021, Company launched India’s first hot rolled Ferritic stainless steel chequered sheet with brand name Jindal Infinity.

This is Jindal Stainless’ second foray in the branded category after the launch of Jindal Saathi, the co-branded stainless steel pipes and tubes products.

Renewable Energy and ESG efforts

JSL has successfully deployed CO2 emission reduction processes like steam generation from waste heat, use of by-product coke oven gas in heating and annealing furnaces, reclaiming effluent water in industrial processes, recycling higher volumes of steel scrap, and deploying electric vehicles in internal transportation.

"JSL invited quotes from renewable energy power suppliers for its requirement and received bids, which are currently under evaluation," the company said in a statement.

JSL is also identifying opportunities for generating and utilizing Green Hydrogen in its manufacturing process. The company intends to integrate a robust ESG and Net-Zero strategy framework in its overall corporate strategy.

Projects update

All brownfield expansion projects announced in Q1FY22 are proceeding as per plan.