JSW Steel FY19 Results - Key Takeaways

JSW Steel - India's largest steel producing company with an installed steel making capacity of 18 MnT pa announced its financial year end FY19 results today. The company reported increase in its crude steel and sales output in FY19

Below are highlights of the conference call conducted:

1.Crude steel output up by 3% in FY19 - Company's crude steel output moved up by 3% to 16.69 MnT in FY19 as compared to 16.27 MnT in FY18. Although on quarterly basis crude steel output inch down by 1% in Q4FY19 to 4.17 MnT against 4.23 MnT in last quarter.

2.Saleable steel sales up by 1% in FY19 - Company sale-able steel sales up by 1% to 15.76 MnT in FY19 which was 15.62 MnT in FY18. Meanwhile sales volumes of flat steel stood at 11.29 MnT ,long steel sales at 3.69 MnT and semis at 0.78 MnT in FY19.

3.Company's Standalone EBITDA moved up by 34% in FY19 - Company's EBITDA registered significant growth of 34% on yearly basis to INR 18,403 Cr in FY19 as compared to INR 13,741 CR in FY18.

However on quarterly basis company's standalone EBITDA stood at INR 4,341 CR in Q4FY19 which was INR 5,403 CR in Q3FY19.

4.Company's sales and production guidance will be up by 1.5% in FY20- Company's production guidance stood at 16.95 MnT in FY19 and sales guidance by 16 MnT in FY20. Both the guidance will be up by 1.5% in FY20.

5.Domestic sales grew by 11% in FY19-Domestic sales volume witness the growth of 11% in FY19. Company's domestic market share increased by 50 bps YoY to 13.6% in FY19. However sales in auto segment decline by 22% on quarterly basis amid sluggish demand and accumulated inventory levels among dealers.

6.Exports accounted for 22% of share in total sales volumes in FY19- Company's export share accounted for 22% in its total sales volumes in FY19. In FY19 total exports volumes stood at 2.4 MnT which was 3.6 MnT in FY18.

7.Domestic demand is anticipated to grow by 6.5% in FY20- Domestic steel demand likely to grow by 6.5% - 7% in FY2020, on the back of strong momentum in government spending on infrastructure.Meanwhile we can expect auto demand to improve amid pre buying and festive sales in FY20. Expectation to improve in H2, however first half of FY20 it is assumed that auto sector will remain under pressure.

8.Coking coal consumption cost up by USD 5 - Blended Coking coal prices in Q4FY19 was assessed higher by USD 5/MT against previous quarter of USD 195/MT, CFR India. It is expected to remain majorly stable in Q1 FY20.

9.Monnet Ispat to ramp up pellet capacity utilization to 2.4 MnT - Monnet Ispat pellet plant was operating at the capacity of 1.8 MnT pa in Q4 FY19. Plan to increase its pellet capacity to 2.4 MnT by second half of FY20

10.Deferment of BF-3 shutdown at Vijaynagar - After taking into considerations strong domestic consumption and strategic intent of ensuring no volume loss for FY20 , company has decided to defer shutdown of BF-3 at Vijaynagar for upgradation to a later period after the new Blast furnace Dolvi gets commissioned by March 2020 and starts ramping up.

11.Expect iron ore mine block auction process to start by Jul'19 - Procedures for merchant iron ore mines which are due to get auctioned by Mar'20 is expected to kick start in Jul'19. We feel mines in Karnataka and Odisha to become auction ready more quickly than in other states. However the bottlenecks associated with it needs to be resolved.

12.Captive iron ore production expected around 5 MnT in FY20 - Out of total iron ore requirement of around 31-32 MnT, JSW Steel is expected to make up for 5 MnT from its own captive mines that it won in block auctions. In FY19, total iron ore output from its captive mines stood at 1.8 MnT. Three iron ore mines are operational, 4th one is expected to start in June and rest two in Jul-Aug.

13.Inventory levels reduced in Q4 FY19- With improvement in international demand and pricing of steel during the quarter, the company strategically shifted its focus to international markets in order to liquidate accumulated stocks built in 3rd quarter.

14.JSW Steel coated products performance - Production volume (Galvanised/Galvalume) for FY19 stood at 1.74 MnT and sales at 1.79 MnT.