Shares of JSW Steel spurted 5.65% to Rs 175.70 after a foreign brokerage reportedly maintained outperform rating on the stock with a target price of Rs 200 per share.
The broker reported stated that the steel maker's Q4 EBITDA was largely in-line, helped by a beat in India operations, while global operations continued to be EBITDA negative. The company expects near-term domestic pricing to be stable, while higher exports may dent blended realisations. There will be lower steel volumes for FY21 and expect H2FY21 to be better for both unit profitability & volumes, it added.On a consolidated basis, JSW Steel's reported net profit slumped 87.4% to Rs 188 crore on 19.6% decline in net sales to Rs 17,556 crore in Q4 March 2020 over Q4 March 2019. Profit before tax (PBT) dropped 94.9% to Rs 119 crore in Q4 March 2020 as against Rs 2,330 crore in Q4 March 2019. Current tax expenses also declined 35.2% to Rs 285 crore in Q4 March 2020 as compared to Rs 440 crore in Q4 March 2019. Operating EBITDA fell 33% to Rs 2,975 crore during the quarter.
The profit was impacted due to an exceptional item of Rs 805 crore. This was on account of impairment provision of Rs 725 crore for the iron ore mining operations at Chile and Rs 80 crore towards retirement of certain fixed assets in India in its consolidated results.
The result was announced after market hours on 22 May 2020. The board recommended a dividend of Rs 2 per equity share for the year ended 31 March 2020.
Crude steel production fell 5% to 3.97 million tonnes in Q4 March 2020 over Q4 March 2019. Total saleable steel sales tumbled 14% to 3.70 million tonnes in Q4 March 2020 over Q4 March 2019.
The firm said its fourth quarter performance was marked by the emergence of the Covid-19 pandemic and measures to curb its rapid spread. The Indian economy was severely impacted by the temporary closure of economic activities across the country after the announcement of the first phase of nationwide lockdown in the last week of March 2020. With a significant supply chain disruption and with a view to ensure safety of workforce across all areas of operations, the company scaled down/suspended production across all facilities around this time period.
The company's consolidated net gearing (net debt to equity) stood at 1.48x at the end of the quarter (as against 1.35x at the end of Q3 December 2019) and net debt to EBITDA stood at 4.50x (as against 3.71x at the end of Q3 December 2019).
For the year ended, consolidated net profit tumbled 47.91% to Rs 3,919 crore on a 13.8% fall in net sales to Rs 71,116 crore in FY 2020 over FY 2019. Consolidated profit before tax dropped 73.02% to Rs 3,013 crore in Q4 March 2020 as against Rs 11,168 crore in Q4 March 2019.
In the financial year 2021 (FY21), JSW Steel estimates its crude steel production to be 16 million tonnes (mt) and saleable steel sales to 15 mt, down from FY20 actuals of 16.06 mt and 15.08 mt respectively.
JSW slashed its total planned capital expenditure spend for FY21 from the earlier guidance of Rs 16,340 crore to about Rs 9,000 crore. The company estimates that capacity utilisation at its plants would remain at around 89% for the full year.
Meanwhile, the company's board has also given approval to raise long-term resources through issuance of non-convertible debentures with warrants which are convertible into or exchangeable with equity shares of the company for up to Rs 7,000 crore through qualified institutional placement.
JSW Steel is a flagship company of the JSW Group, an integrated steel manufacturer in India with an installed steel-making capacity of 18 million tonnes per annum (MTPA).
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