Jindal Stainless Steel rallies 4% after Q2 net profit zooms 120% on higher incomes

Jindal Stainless Steel Limited shares were traded 4 percent higher intraday on October 20 after the company more than doubled its net profit for the second quarter this fiscal on increased income.

The stainless steel major witnessed a remarkable 120 percent surge in its consolidated net profit, reaching Rs 764 crore in the quarter ended September 2023. This marked a significant increase from the Rs 347.02-crore net profit a year ago, as reported in JSL’s regulatory filing on Thursday.

During the second quarter of the current fiscal year, the company’s total income rose to Rs 9,828.97 crore from Rs 8,776.61 crore in the previous year. JSL’s expenses also increased to Rs 8,944.04 crore, surpassing the Rs 8,335.52 crore reported a year earlier.

In H1FY23, the company achieved a consolidated net profit of Rs 1,502 crore, reflecting a 75.67 percent improvement from the Rs 855 crore net profit in H1FY23.

The demand for domestic stainless steel continued to rise, particularly in the auto segment, and other consumer-facing sectors ahead of the upcoming festive season, according to the company’s earnings report.

In a separate statement, JSL Managing Director Abhyuday Jindal said: “Our domestic sales increased year-on-year (YoY), buoyed by the government’s push for stainless steel in strategic sectors.” He also expressed confidence that per capita consumption of stainless steel in India would increase from the current 2.8 kg in the coming years, especially with the pending National Stainless Steel Policy.

Jindal pointed out that Chinese imports had increased by nearly 55 percent on-year, underscoring the unchecked dumping of subsidised and substandard Chinese products in the Indian market. He also emphasised the industry’s hope that the government would address the escalating imports from China, which are adversely impacting the sector, including the MSMEs, and hindering the government’s vision of an Atmanirbhar Bharat.

During the September quarter, the company’s earnings before interest, taxes, depreciation, and amortization reached Rs 1,231 crore, marking an 80 percent increase YoY.

The board also approved a proposal to explore options for selling, liquidating, or divesting equity stake in its subsidiary, PT Jindal Stainless, Indonesia (PTJSI), located in Gresik, Indonesia. This decision was driven by unfavorable market conditions in Indonesia, stemming from the lack of a level-playing field and competition with Chinese products.

The statement elaborated that most of the Indonesian market is dominated by Chinese players, resulting in severe trade protection measures on exports of stainless steel products from Indonesia to major markets such as the US and the EU.

In an interaction with CNBC-TV18, Anurag Mantri, representing Jindal Stainless, shared insights on various aspects of the company’s performance and future outlook. During the conversation, he mentioned that Q1 exports experienced a decline due to weaknesses in the US and European markets. Consequently, the company focused on boosting its domestic volumes in the previous quarter.

Mantri expressed optimism about the volume growth for FY24, anticipating a growth rate of over 20 percent. He also highlighted that the EBITDA per ton in the first half (H1) amounted to Rs 20,000 and reassured that they intend to adhere to their guidance range of Rs 19,000 to Rs21,000.

However, he acknowledged the presence of uncertainties in the export markets, emphasizing that further clarity would emerge after Q3 as the export market’s future remained uncertain. He expressed confidence in achieving a 15 percent share in this market.

Mantri shed light on the challenges posed by the imposition of a significant anti-dumping duty on Indonesian products in the US markets. Consequently, Jindal Stainless is actively exploring various options for dealing with the Indonesian markets, which are heavily dominated by Chinese players.

He also stated that the company aims to reduce its debt for FY24 to Rs 4,700 crore, as compared to the earlier guidance of Rs 5,400 to Rs 5,500 crore. Furthermore, he anticipates the removal of pledges by the end of the calendar year.

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