JSW Steel LtdQ2 FY22
JSW Steel Ltd Q2 FY22 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹1,249P/E: 25.7Market Cap: ₹3.1L CrSector: Ferrous Metals
Management growth scorecard
Revenue
Category 2
Margin
Category 3
Fundraise
N/A
Order
N/A
Capex
Yes
1 of 3 growth signals are positive — mixed outlook.
Full analysisRevenue guidance
Category 2- Volume guidance for the current year is 18.5 million tons, with 17 million tons expected from existing operations and 1.5 million tons from expansion projects.
- Bhushan Power Steel Ltd (BPSL) plans to expand capacity from 3.5 million tons to 5 million tons by end-FY23 or early FY24.
- Vijaynagar expansion of 5 million tons is targeted for completion by FY24 end.
- In about three years, an incremental capacity of approximately 12.5 million tons is expected, leading to a total of around 15 million tons combined from BPSL and Vijaynagar expansions.
- Indian steel demand is forecasted at 110 million tons for the current year, up from 94 million tons last year, encouraging volume absorption domestically.
- Exports remain strong, with 17 million tons exported last year and 11 million tons in the first six months this year.
- Revenue growth is supported by volume increases, cost reduction initiatives, and turnaround in overseas and downstream operations.
See what JSW Steel Ltd management said on margin guidance — free account, 30 seconds.
Fundraise plans
- There is no explicit mention of new fundraising through debt or equity in the provided transcript.
- The company has discussed debt repayment and reduction: Bhushan Power & Steel (BPSL) total debt at takeover was Rs. 13,300 crores; Rs. 3,300 crores have been prepaid, reducing outstanding debt to Rs. 10,000 crores.
- JSW Steel standalone debt is Rs. 55,400 crores, with consolidation of BPSL debt to occur in the quarter.
- Capital expenditure (CAPEX) plans totaling Rs. 3,500 crores are planned over 2.5 years, including Rs. 1,500 crores for capacity expansion and cost reduction, but no mention of raising funds specifically for CAPEX.
- Working capital investments have increased by Rs. 8,200 crores, expected to partially release in the second half.
- No direct indication of fresh debt or equity issuance for expansion or other purposes in the current period.
See what JSW Steel Ltd management said on order book — free account, 30 seconds.
Capex plans
Yes- Bhushan Power (BPSL) CAPEX: Total Rs. 3,500 crores over 2.5 years, including Rs. 1,500 crores for capacity expansion to 3.5 million tons and cost reduction. (Page 19)
- Additional Rs. 2,000 crores planned for expanding BPSL capacity from 3.5 to 5 million tons, expected completion by end FY23 or early FY24. (Pages 15, 16)
- Vijaynagar brownfield expansion of 5 million tons progressing well; Coke oven plant commissioning staged over current and next financial year. (Page 6)
- Dolvi expansion project: 1.5 million tons production and 1.4 million tons sales expected from expansion, with significant cost benefits due to hot metal use instead of DRI. (Page 7)
- Galvanizing line at Vasind to start in next two months; other downstream units operating fully in stabilized manner. (Page 20)
These investments underscore capacity growth and cost reduction initiatives across operations.
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Margin guidance
Category 3- JSW Steel expects continued volume growth, targeting 18.5 million tons production this year, aided by smooth commissioning of expansion projects (Page 20).
- Bhushan Power Steel Limited (BPSL) plans capacity expansion from 3.5 million tons to 5 million tons by end FY23 or early FY24, with cost reduction initiatives underway (Pages 15-17).
- EBITDA per ton at BPSL (~Rs. 23,000) is converging with JSW Steel standalone levels, indicating margin improvement (Page 13).
- Dolvi expansion will lower costs significantly with 1.5 million tons production, enhancing margins from Q3 onwards (Pages 7, 12).
- Overseas operations are improving with capacity utilization at 50-55%, expected to rise, supporting earnings growth (Page 12).
- Overall consolidated EBITDA growth is supported by higher volumes, overseas turnaround, downstream contributions, and cost reductions (Pages 5-6).
- Management is considering an energy surcharge pass-through to mitigate coking coal price volatility (Pages 7, 13).
Order book
The transcript does not explicitly provide details on the current or expected order book or pending orders for JSW Steel. However, relevant insights related to production, capacity, and demand include:
- First six months production: 8.2 million tons from existing operations.
- Guidance for existing operations production for the year: 17 million tons.
- Expansion project commissioning expected to contribute 1.5 million tons.
- Total production guidance: 18.5 million tons achievable.
- Expectation of robust demand in India, with steel demand anticipated to rise to 110 million tons from 94 million tons last year.
- Exports remain strong with 11 million tons shipped in the first six months.
- Capacity expansions underway at Bhushan Power and Vijaynagar, aiming to increase capacity by 12.5 to 15 million tons within 3 years.
- Demand outlook expected to absorb increased capacity domestically and via exports.
No specific order book numbers or pending orders details are disclosed in the provided pages.
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