JSW Steel: Resilient Performance Amid 70% Profit Decline

Released on 24 Jan 2025:

JSW Steel showcased its operational resilience in Q3 FY25, achieving its highest-ever quarterly crude steel production of 7.03 million tonnes, a 2% year-on-year (YoY) increase, and record steel sales of 6.71 million tonnes, up 12% YoY. This growth was primarily driven by robust domestic demand, which saw sales grow 14% YoY, buoyed by infrastructure and construction activity.

However, the company’s profitability took a sharp hit. Net profit after tax declined by 70.6% YoY, dropping from ₹2,450 crores in Q3 FY24 to ₹719 crores in Q3 FY25. This significant drop is attributed to a 10% YoY decline in domestic steel prices and weaker realizations in international markets such as the U.S. and Italy. Additionally, global steel price moderation and increased imports into India exerted further pressure on margins.

Despite these challenges, lower coking coal prices provided some relief. Bhushan Power & Steel, a JSW subsidiary, reported a 25% quarter-on-quarter (QoQ) rise in EBITDA, largely due to reduced input costs. The company’s Indian operations also benefitted from cost efficiencies, helping offset higher iron ore costs.

Looking ahead, JSW Steel remains optimistic about Q4 FY25, anticipating a recovery driven by government capital expenditure, public housing projects, and rural consumption. The company is also ramping up production capacity at its Vijayanagar and Bhushan Power plants, putting it on track to achieve 98% of its FY25 production target of 28.4 million tonnes.

While international operations struggled, with the Ohio plant reporting an EBITDA loss of $15.58 million, JSW’s focus on domestic market strength and cost optimization positions it well to navigate global uncertainties and sustain its growth trajectory.

JSW Steel’s EBITDA, PAT, and Average Sale Price Per Ton – Past Three Quarters

1. EBITDA Per Ton (₹ and USD)

Q3 FY24: ₹11,967 ($144.18)

Q2 FY25: ₹8,869 ($106.86)

Q3 FY25: ₹8,314 ($100.17)

Trend: EBITDA per ton has dropped 30.5% YoY and 6.3% QoQ, reflecting lower steel prices and higher costs in some areas.

2. EBITDA Margin (%)

Q3 FY24: 17.12%

Q2 FY25: 13.70%

Q3 FY25: 13.48%

Trend: EBITDA margin has fallen 3.64 percentage points YoY, mainly due to weaker steel price realizations.

3. PAT Per Ton (₹ and USD)

Q3 FY24: ₹4,083 ($49.20)

Q2 FY25: ₹659 ($7.94)

Q3 FY25: ₹1,072 ($12.91)

Trend: PAT per ton has dropped 73.7% YoY, but improved from the previous quarter.

4. Average Sale Price (ASP) Per Ton (₹ and USD)

Q3 FY24: ₹69,900 ($841.93)

Q2 FY25: ₹64,748 ($780.67)

Q3 FY25: ₹61,666 ($742.97)

Trend: ASP has fallen 11.8% YoY and 4.8% QoQ, impacting profit margins.

Summary

JSW Steel’s per-ton profitability has declined significantly due to lower steel prices (-10% YoY), weak international operations, and higher tax expenses. However, lower coking coal prices and strong domestic demand provided some support. The company remains focused on cost control and capacity expansion to improve margins in upcoming quarters.

Key Steel Market Numbers in India (Q3 FY25):

1. Production:

Crude Steel Production: 37.38 million tonnes, up 3.5% YoY.

2. Consumption:

Apparent Steel Consumption: 38.46 million tonnes, a 6.8% YoY increase.

3. Sales:

JSW Steel Domestic Sales: Up 14% YoY, reflecting robust demand from infrastructure and construction sectors.

Total Steel Sales by JSW Steel: 6.71 million tonnes, up 12% YoY.

4. Imports:

Steel Imports in Q3: 2.83 million tonnes, down 10.8% QoQ, but up 16.7% YoY for 9M FY25.

5. Exports:

Steel Exports in Q3: 1.82 million tonnes, up 44% QoQ, but down 16.5% YoY for 9M FY25.

6. Steel Prices:

Domestic steel prices declined by 10% YoY and 3% QoQ due to global price moderation and import competition.

7. Capacity Utilization:

JSW Steel’s Indian operations achieved 91% capacity utilization, reflecting strong operational efficiency.