India: JSP's steel production remains stable in Q1FY'25, sales up 4% q-o-q

Steel production by Jindal Steel & Power (JSP) remained stable in Q1FY'25, while sales increased by 4% q-o-q. Capital expenditures for the quarter amounted to INR 2,796 crore. The 6 million tonne per annum (mtpa) expansion project's on-site progress is proceeding as planned. The core facility, comprising the blast furnace and pure CRM, is anticipated to be operational by Q4FY'25. Completion of the remaining auxiliary infrastructure is projected within the subsequent 9-12 months.

The company is nearing the final stages of approval and anticipates that, within the next two to two and a half months, it will be able to increase capacities at Utkal C from 3.37 mnt/year to potentially 4.78 mnt/year. Additionally, the company expects Utkal B1 to commence operations and capacity expansion at Utkal C to be realised within the next two to three months.

Other highlights

Production remains stable q-o-q: The company's production remained stable q-o-q at 2.05 mnt in Q1. However, production increased marginally by 0.5% y-o-y from 2.04 mnt in Q1FY'24.

Steel sales increase q-o-q: Steel sales stood at 2.09 mnt in Q1, up by 4% from 2.01 mnt in the preceding quarter. Sales were up by 14% y-o-y from 1.84 mnt in Q1FY'24.

Revenue growth was primarily driven by increased sales of HSM products. The product mix experienced a shift this year, with long products comprising 57% of sales compared to 68% in the prior year. Conversely, flat products accounted for 43% of sales this year, up from 32% in the previous period.

The value-added product/grade sales contributed to 60% of total sales in Q1FY'25.

The major chunk of domestic sales came from the infrastructure sector contributing about 35% followed by trade/retail sales at 30%. Moreover, engineering and packaging, building and construction, and automotive sectors had a share of 19%, 12% and 4%, respectively, of domestic sales.

EBITDA increases q-o-q: The company's adjusted EBITDA rose by 13% in the quarter to INR 2,831 crore as against INR 2,512 crore in the previous quarter. Also, the same increased by 4.7% y-o-y from INR 2,704 crore in Q1FY'24, mainly on account of higher sales, higher sales realisations and cost efficiency.

Net sales realisations (NSR): The company witnessed a 1% enhancement in its net sales realisations (NSR) in the current quarter. The company expects a slight softening of NSR by 1%.

Operational costs: SMS cost in the quarter witnessed a considerable drop owing to reduction in both coking coal and thermal coal prices along with superior productivity in operations. Further, the company is expecting that coking coal prices in FY'25 will edge down further by around $30-35/t.