JSW Steel’s better than expected performance in the seasonally weak quarter despite cost pressures lifted street sentiment. A day when markets were down by 1% JSW Stock 0.4% higher while closing. Overall, the outlook remains healthy. Even though construction activities remained soft during the September 2018 quarter (Q2) impacted by the monsoon, the company’s steel sales rose by per cent year-on-year and 3% sequentially to 3.96 million tonnes (MT).

Despite some softness in prices of long steel, which is used in construction (down about 5 % sequentially), and prices of flat products such as manufacturing white goods and automobiles being stable, gross sales at Rs. 208.9 Billion(up 23.5% YoY). Analysts estimates to the weak rupee and better realizations. Beating the Street’s worries over rising input prices (such as coal, iron ore, crude oil), consolidated operating profit jumped 62% YoY to Rs. 49.06 billion. This drove net profit growth of 150% to Rs. 49.06 billion. In fact, in the past four quarters, JSW has clocked over 100% increase in profits.

Give its plans to expand and acquire steel assets, as well as backward integration initiatives to boost operating performance, prospects for the company remain firm.

The healthy steel demand and realization outlook strengthens confidence. Long product prices have already bounced from subdued August Levels, while flat products prices, which were hiked by Rs500-1000 a tonne in September are seen trending higher. The rupee decline and government measures are helping control cheaps imports into India. The finish steel consumption grew 6.8% in Q2 and the World Steel Association has also upped India’s steel growth estimate for CY2018 from 5.5% to 7.5% on strong demand.

Overall, as a result, JSW figures among the top pick of brokerages. One of the analysts has a target price Rs 447 while another raises its target to Rs 433 considering the earnings opportunities.

Get The Latest Stock Updates, Equity Tips, Share Market Tips, Stock Market Tips, Intraday Tips  @ Investelite Research

Leave a Reply

Your email address will not be published. Required fields are marked *