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May 18, 2024

JSW Steel Stock Dips 2% as Q4 Profit Plummets 65%

JSW Steel shares experienced a significant drop, falling as much as 1.64% to reach an intraday low of Rs 892.35 per share on Saturday. This decline follows the steel giant’s announcement of its financial performance for the fourth quarter of the fiscal year 2024 (Q4FY24). The company’s consolidated net profit took a substantial hit, plunging by 64.5% to Rs 1,299 crore from Rs 3,664 crore in the corresponding quarter of the previous year. On a sequential basis, the profit declined 46% from Rs 2,415 crore in Q3FY24.

In terms of revenue, JSW Steel reported a slight year-on-year (Y-o-Y) decrease of 1.5%, bringing in Rs 45,646 crore compared to Rs 46,346 crore in Q4FY23. Despite this Y-o-Y decline, the company saw a sequential revenue increase of 10.4% from Rs 41,337 crore in the previous quarter.

The rise in expenses also played a crucial role in the financial outcomes for JSW Steel. The company’s expenses rose to Rs 44,401 crore, marking a 3% Y-o-Y increase from Rs 43,170 crore. On a sequential basis, expenses surged by 14.4% from Rs 38,815 crore.

JSW Steel’s earnings before interest, tax, depreciation, and amortisation (EBITDA) for the quarter stood at Rs 6,124 crore, with an EBITDA margin of 13.2%. This represented a 15% reduction in operating profit compared to the previous quarter. The decline in operating profit was largely attributed to lower sales realisations and increased costs of coking coal.

During Q4FY24, the company invested Rs 3,503 crore, contributing to a total investment of Rs 16,752 crore for the entire fiscal year. Despite the financial setbacks, JSW Steel exceeded its annual production guidance, achieving a production of 26.68 million tonnes against a target of 26.34 million tonnes, thus reaching 101% of its target.

In terms of shareholder returns, the board of directors recommended a final dividend of Rs 7.30 per fully paid-up equity share of Rs 1 each for the fiscal year ending March 31, 2024.

JSW Steel’s market capitalisation was reported at Rs 2,18,379.04 crore, according to the Bombay Stock Exchange (BSE). The stock’s 52-week high stands at Rs 914.85, while its low is Rs 681.30. As of 11:50 AM, JSW Steel shares were trading 1.60% lower at Rs 892.80 per share, while the S&P BSE Sensex was marginally higher at 73,991.21 levels.

The significant drop in net profit and the increased expenses highlight the challenges faced by JSW Steel in the current economic climate. The steel industry has been grappling with fluctuating raw material costs and variable demand, impacting overall profitability. Despite these hurdles, JSW Steel’s ability to meet and exceed production targets demonstrates its operational resilience and strategic management.

The proposed dividend reflects the company’s commitment to returning value to its shareholders, even amidst a challenging financial period. Going forward, JSW Steel’s focus will likely remain on managing costs, enhancing operational efficiency, and navigating market volatility to stabilize its financial performance.

Jhumpa Lahiri

Jhumpa Lahiri

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