India: Jindal SAW reports healthy Q3FY'24 performance; Order book remains strong

Jindal SAW's total income (standalone) for Q3FY'24 stood at INR 47,857 million, higher by 3% y-o-y compared to INR 46,409 million in Q3FY'23, the company reported recently.

EBITDA (standalone) stood at INR 8,899 million in Q3, up by 49% y-o-y from INR 5,985 million in Q3FY'23.

Profit after tax (PAT) rose by 70% y-o-y to INR 4,523 million in the third quarter of FY'24 against INR 2,656 million in third quarter of the previous financial year.

The company's successful execution led to increased sales volume, resulting in higher turnover and improved profit margins. This improvement was further fueled by increased exports, higher sales volume, and stable raw material prices.

Notably, the company's product mix of iron & steel pipes and pellets provides a natural buffer against volatile commodity market fluctuations.

Highlights:

1. Order book position: The company's current orderbook stands at $1.49 billion out of which iron and steel pipes orders are around $1,474 million and $14 million are pellet orders.

The company's order book includes nearly 35% of orders from global markets, which presents a significant opportunity for exports. These orders are scheduled to be completed in the next 9-12 months.

The company is well-positioned to meet elevated infrastructure demands across the MENA region, aligned with individual countries' ambitious long-term goals.

2. UAE operations: Jindal SAW Gulf LLC (UAE subsidiary) in Abu Dhabi (UAE) has witnessed an improvement in execution of orders resulting in higher sales of DI Pipes at nearly 63,000 MT in Q3FY'24 from approximately 59,000 MT in Q2FY'24.

Adding to its existing orders, Jindal Saw Gulf LLC (UAE Subsidiary) boasts an impressive order book of approximately $135 million.

3. Sathavahana Ispat Limited: After acquiring Sathavahana Ispat in April 2023, the company has implemented operational improvements that have boosted their facilities to running at nearly 85% capacity. This, along with their strategic location in South India, strengthens their position in the region and above order book includes orders for these facilities as well.

4. Update on Jindal ITF Ltd v/s NTPC case: Jindal ITF (Jindal SAW subsidiary) won an arbitration against NTPC in 2019 for claims exceeding INR 1,891 crore. Both parties appealed to the Delhi High Court, which heard NTPC's arguments in December 2023. The next hearing is scheduled on 14-15 February, 2024.

5. Joint venture with Hunting Energy Pte Ltd: Jindal SAW and Hunting Energy Services have formed a joint venture to build India's first premium Oil Country Tubular Goods (OCTG) threading facility. Hunting's technology will thread premium connections on seamless casing and tubing, a first for India, reducing reliance on imports and aligning with the "Aatmanirbhar Bharat" initiative.

The JV company is in the process of seeking necessary approvals including API etc., following which commercial operations will commence.

Outlook:

The global steel tubes market is poised for continued growth driven by urbanisation, infrastructure development, and oil & gas projects, particularly in Asia-Pacific, the Middle East, and India. Ongoing urban development in emerging economies, government infrastructure investments in transportation, water, and energy, along with India's expanding oil & gas exploration and water supply projects, will create significant demand for steel tubes. While geopolitical uncertainties may cause temporary fluctuations, the long-term outlook for the market remains positive.