JSW Steel

Though the YoY net profit of the company slipped 19% at Rs.137 crore, the market rejoiced because despite the high iron ore prices it had to pay due to mining ban in Karnataka and Goa, it remained in the green. With the rupee depreciating 4% against the dollar during this period, the company also incurred a forex loss of Rs.327 crore.  Thanks to demand picking up towards the end of Q3, sales improved 5% at Rs.8275 crore but Qoq, it was down 6.3%. This can be attributed to the subdued steel prices, domestically and in the international market. Its exports fell 31% sequentially.  Its crude steel sales was flat at 2.17 million tonnes (MT), flat QoQ but up 14% on a YoY.

For JSW, the only advantage was that it went in for low grade of iron ore yet it had to see price swing like a pendulum from $114/ tonne to $89/tonne, all within the same quarter. The company’s coal price was pegged at $202/tonne during Q3, down 5% sequentially. This helped bring down its raw material cost by 16% on QoQ. But this did not really the margins or the bottomline as steel realisations fell over 6% on QoQ. Consequently, EBITDA margin was marginally down from 15.9% to 15.8% on YoY and NPM has shown a fall of 18.7%. For the current Q4, all hinges on demand reviving in both domestic as well as international market.  The company had given a guidance of  8.5mt production for FY13 and though it will be able to meet this target, whether it will translate into better margins remains to be seen.