JSW Steel Ltd Q3 FY24 Earnings Conference Call Insights

Key highlights from JSW Steel Ltd (JSWSTEEL) Q3 FY24 Earnings Concall

• Steel Industry Trends
  • Global crude steel production flat in 2023, decline in advanced economies.
  • China’s steel production flat, but exports up 32% on weak domestic demand.
  • India’s steel production up 12%, consumption up 12% in Q3FY24.
  • Imports up in India, but should moderate with global prices nearing parity.
• Financial/Operational Performance
  • Consolidated revenues at INR41,940 crore, EBITDA at INR7,180 crore.
  • EBITDA per tonne at INR11,957.
  • Record consolidated steel production at 6.87 million tons in Q3FY24, up 12% YoY.
  • Consolidated sales volume at 6 million tons, down 5% QoQ.
  • Institutional sales up 8% QoQ; share of value added products at 60%.
• Balance Sheet Position
  • Net debt increased QoQ largely due to higher working capital and capex.
  • Balance sheet remains healthy; net debt ratios remain range bound.
  • Expect some deleveraging by FY24 end with working capital release.
  • Will repay upcoming USD bonds from cash balances and internal accruals.
  • Onshore funding currently more cost competitive.
  • Will continue tapping onshore markets given lower costs.
• Raw Material Cost
  • Coking coal costs increased $21/tonne in Q3, guided increase of $20-25/tonne in Q4.
  • Iron ore costs increased in India due to higher exports and global prices.
  • Enhancing captive mining limits to improve raw material security.
• Pricing Environment
  • Global steel prices increased significantly across most regions.
  • Domestic prices nearing import parity; expect recovery in Q4.
  • Q4 to be supported by higher exports, better product mix.
• Growth Outlook
  • Remain positive on India’s growth story and steel demand growth.
  • Capex plans on track; spent INR13,249 crore in 9MFY24.
  • External shocks like supply chain disruption or oil spike are key risks.
• Capex Spending
  • Capex for FY23 revised down to INR 18,000 crores from INR 20,000 crores due to some project delays.
  • Payments for some projects are spilling over into Q1 FY24.
  • No major project cancellations, most expansions on track.
• Volume Growth
  • BPSL expansion to add 1.5 million tonnes capacity by end of Q4 FY23.
  • Vijayanagar expansion of 5 million tonnes to start contributing fully in FY24.
  • Will provide volume guidance for FY24 during next earnings call.
• Future Capacity Expansion
  • Brownfield expansion potential of ~15 million tonnes across Vijayanagar, Dolvi and Jharsuguda.
  • At 10% demand growth, requires 5-6 million tonnes annually.
  • Also planning 4 million tonne greenfield facility in western India.
  • Target exceeding 50 million tonnes capacity by end of the decade.
• Outlook
  • Global economy more resilient than expected in 2023.
  • Inflation dropping across regions, rate cuts likely from mid-2024.
  • India demand growth of 14-15 million tonnes estimated in 2023 over 2022.
  • Total demand of 134-135 million tonnes likely by year end.
  • 8-10% medium term growth expected to continue in India.
• Slurry Pipeline Project
  • 90 kms of 300 kms pipeline laying completed.
  • 125 kms welding completed.
  • Secured land permits in Odisha section.
  • On track for commissioning in 2026.
• Working Capital and Inventory
  • Partially liquidating inventory build-up from Q3 in Q4.
  • Will release some working capital to reduce debt.
  • Stronger Q4 volumes will also improve working capital.