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JSW Steel (BOM:500228) |
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WIKI ANALYSIS
JSW Steel is a fully integrated steel producer having units across the two states of Karnataka and Maharashtra, producing everything from pellets to colour coated steel. The company recently completed 2.8 MTPA expansion project at its Vijayanagar works thus taking its total capacity to 7.8 MTPA, making it the largest private sector steel company in India. The company is the only one in India to employ the rare ‘Corex’ technology. The company has also acquired iron ore and coal mining concessions in Chile and Mozambique respectively in order to enhance the raw material integration for Indian operations.
JSW Steel’s standalone topline grew by 24% YoY in FY09 mainly led by higher sales realisations during the first half of the fiscal. Volumes grew marginally by 1% YoY to 3.4 m tonnes in FY09. However, the bottomline declined by 73.5% YoY due to huge forex losses coupled with higher interest and depreciation charges during the fiscal. Operating margins slumped by 8.3% to 21.1% in FY09 mainly due to higher raw material costs. On consolidated basis, net sales grew by 27.9% YoY in FY09. Operating margins declined from 27.6% in FY08 to 18% in FY09. Consolidated net profits declined by 83.2% YoY mainly due to inventory write-down and lower/negative margins in the second half of FY09 in the overseas subsidiaries in UK and USA accounted by continuous fall in product prices.
JSW Steel plans to add 3.2 m tonnes of capacity to Vijayanagar plant taking its capacity to 10 MTPA by 2011. It also plans to complete the first phase of a new hot strip mill of 5 MTPA capacity by end of FY10. Apart from this, the company also has plans to set up two 10 MTPA Greenfield projects in West Bengal and Jharkhand in phases. It also plans to develop a coking coal mine and thermal coal mine in Jharkhand and Orissa respectively through joint ventures.
| Standalone Financial Snapshot | ||||||
| (Rs m) | 4QFY08 | 4QFY09 | Change | FY08 | FY09 | Change |
|---|---|---|---|---|---|---|
| Steel sales (000' tonnes) | 1,009 | 1,062 | 5.30% | 3,405 | 3,428 | 0.70% |
| Net sales | 41,898 | 33,288 | (20.60)% | 114,200 | 141,584 | 24.00% |
| Expenditure | 32,424 | 29,227 | (9.90%) | 80,654 | 111,681 | 38.50% |
| Operating profit (EBDITA) | 9,474 | 4,061 | (57.10%) | 33,546 | 29,903 | (10.90%) |
| EBDITA margin (%) | 22.60% | 12.20% | 29.40% | 21.10% | ||
| Other income | 362 | 973 | 169.10% | 2,571 | 1,024 | (60.20%) |
| Interest (net) | 1,911 | 2,149 | 12.40% | 4,404 | 7,973 | 81.00% |
| Depreciation | 2,333 | 2,309 | (1.10%) | 6,872 | 8,277 | 20.40% |
| Profit before tax | 5,591 | 577 | (89.70%) | 24,841 | 14,678 | (40.90%) |
| Extraordinary expense | 1,391 | 178 | (7,901) | |||
| Tax | 2,372 | 263 | (88.90%) | 7,559 | 2,191 | (71.00%) |
| Profit after tax/(loss) | 4,610 | 492 | (89.30%) | 17,282 | 4,585 | (73.50%) |
| Net profit margin (%) | 11.00% | 1.50% | 15.10% | 3.20% | ||
| No. of shares (m) | 187 | |||||
| Diluted earnings per share (Rs)* | 24.5 | |||||
| Price to earnings ratio (x)** | 17 | |||||
(* annualised, ** on trailing twelve months earnings)
| Cost break-up | ||||||
|
(Rs m) | 4QFY08 | 4QFY09 | Change | FY08 | FY09 | Change |
|---|---|---|---|---|---|---|
| Raw materials | 23,253 | 22,833 | (1.80%) | 56,939 | 84,501 | 48.40% |
| % sales | 55.50% | 68.60% | 49.90% | 59.70% | ||
| Staff cost | 979 | 625 | (36.10%) | 2,740 | 2,888 | 5.40% |
| % sales | 2.30% | 1.90% | 2.40% | 2.00% | ||
| Power and fuel | 1,961 | 1,798 | (8.30%) | 5,324 | 6,731 | 26.40% |
| % sales | 4.70% | 5.40% | 4.70% | 4.80% | ||
| Other expenses | 6,232 | 3,972 | (36.30%) | 15,651 | 17,562 | 12.20% |
| % sales | 14.90% | 11.90% | 13.70% | 12.40% | ||
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