JSW Steel gains as company sticks to FY23 volume guidance despite Q2 loss

The share price of JSW Steel gained over 2 percent in the morning trade on October 25, as the company maintained its volume guidance of 24-25 million tonnes for the full financial year despite posting a loss of Rs 915 in the second quarter of FY23.

At 10 am, the stock was quoting Rs 624 on the National Stock Exchange, up 2.19 percent.

Follow our live blog for all the market action

For the quarter ended September 30, 2022, the steelmaker reported a consolidated loss of Rs 915 crore against a consolidated net profit of Rs 7,179 crore in the year-ago period. During the previous quarter, the company earned a profit of Rs 839 crore.

A sharp drop in steel prices, higher power and fuel costs and a decline in realisations impacted profitability.

In a post-earnings interview to Moneycontrol, JSW Steel’s joint managing director and Group CFO Seshagiri Rao said, “We expect to stick to our volume guidance of 24-25 million tonnes for the financial year due to increased domestic market share. India’s consumption stood at 106 million tonnes in the previous financial year, it is now expected to be at 112-115 million tonnes by the end of the new financial year.”

Rao expects net debt to be bought down by Rs 5,000 crore in the next two quarters.

Global brokerage Citi has a “neutral” call on the stock with a target price of Rs 625 a share. “The company expects steel prices to stabilise and costs to decline in Q3. We lower FY23/24 EBITDA estimates by 8 percent/5 percent,” Citi said.

Nomura, however, has a “reduce” call on the stock, with a target price of Rs 570 a share. The brokerage has cut FY23/FY24 EBITDA estimates by 21 percent/5 percent to factor in lower steel prices.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.