India: JSP's steel output edges down by 4%, sales fall 11.5% q-o-q in Q2FY'25

• Production rises by 3.7% y-o-y
  
  
• Capex touches INR 2,642 crore
  
  

The steel production and sales volume of Jindal Steel and Power (JSP), an Indian industrial powerhouse, fell 3.90% and 11.48% q-o-q, respectively, in Q2FY'25.

Capital expenditures for the quarter totalled INR 2,642 crore, bringing the cumulative capex spent under the ongoing expansion programme to approximately INR 20,562 crore. The expansion project at Angul is progressing on schedule, and the company is in the advanced stages of opening the Avarutkal B1 mines. The primary focus at this stage is the start-up of Utkal B1, for which all necessary approvals have been received.

Highlights

Production declines q-o-q: The company's production edged down by 3.90% to 1.97 million tonnes (mnt) in Q2FY'25 from 2.05 mnt in the previous quarter. However, production showed a 3.7% y-o-y increase compared to 1.90 mnt in Q2FY'24.

JSP's hot strip mill (HSM) is currently operating at a utilisation rate of approximately 40%.

Steel sales fall q-o-q: Steel sales stood at 1.85 mnt in Q2FY'25, down by 11.48% from 2.09 mnt in the preceding quarter. Additionally, sales were down by 8% y-o-y from 2.01 mnt in Q2FY'24.

During the quarter, the infrastructure segment accounted for the majority of the company's sales, at 40%. Distribution followed closely, with a 31% share, while the remaining 29% was constituted by the engineering, building, and automotive segments.

The company's value-added sales grew to 973,000 t compared to 937,000 t the previous year. This increase can be attributed to JSP's strategic focus on emerging sectors such as shipbuilding, renewable energy, and defence.

EBITDA drops q-o-q: JSP's adjusted EBITDA fell 24.97% in Q2FY'25 to INR 2,124 crore as against INR 2,831 crore in the previous quarter. Additionally, the same declined by 4% y-o-y from INR 2,213 crore in Q2FY'24.

Net sales realisations (NSR): The company's NSR for the quarter stood at INR 54,603/t against INR 55,840/t last quarter. JSP has increased prices by INR 1,000-3,000/t across their product basket, which is expected to boost its NSR in Q3.

Raw material costs: On the cost front, coking coal prices decreased by $35/t, while iron ore tags declined by INR 500/t, in line with the guidance. A further reduction of approximately $20-25/t is expected in coking coal prices during Q3FY'25.