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JSW Steel, a prominent player in the Indian steel industry, experienced a significant downturn in its second quarter (Q2) earnings for the fiscal year 2024, leading to a substantial decline in its share price. The company reported an 85% fall in net profit, reaching Rs 404 crore for the quarter ending September 2024, compared to Rs 2773 crore in the corresponding period of the previous year. This substantial dip in profitability was primarily attributed to a combination of factors, including increased imports of competitively priced finished steel from overseas markets and sluggish demand within the domestic market. The influx of cheaper steel imports exerted downward pressure on domestic prices, pushing them to multi-year lows, thus impacting JSW Steel's revenue and profitability.
The company's revenue also took a hit, falling by 11% to Rs 39,684 crore in Q2, compared to Rs 44,584 crore in the same period of the previous fiscal year. This decline in revenue reflected the challenging market conditions characterized by weakened demand and price pressures. Furthermore, the company's operating earnings before interest, taxes, depreciation, and amortization (EBITDA) slipped to Rs 5437 crore in Q2, down from Rs 7886 crore in the corresponding quarter of the previous year. This resulted in a contraction of the EBITDA margin to 13.7% in Q2, compared to 17.7% in the same period last year and 12.8% in the April-June quarter of the current fiscal year. The decrease in EBITDA margin highlighted the intensifying pressure on JSW Steel's profitability amid the competitive market dynamics.
Despite the challenges in the market, JSW Steel managed to achieve a 7% year-on-year and quarter-on-quarter increase in consolidated crude steel production, reaching 6.77 million tonnes. This rise in production was attributed to improved performance at the company's Dolvi and BPSL facilities. Notably, JSW Steel's Indian operations maintained a high capacity utilization rate of 91%. However, total sales volumes registered a 3% decline year-on-year, reaching 6.13 million tonnes, while remaining flat quarter-on-quarter. This decrease in sales volumes was mainly attributed to a reduction in exports, indicating a decline in international demand for JSW Steel's products. Following the release of its Q2 earnings, JSW Steel's share price experienced a significant drop in the intraday trading session. The stock slid by 3%, reaching Rs 927.20, and the company's market capitalization fell to Rs 2.30 lakh crore. The stock eventually closed the day at Rs 943.15, representing a 1.56% decline on the Bombay Stock Exchange (BSE). The stock market reaction highlighted the concerns among investors regarding the company's future prospects amidst the challenging market conditions.