A sharp drawdown in volumes and inefficiency in overseas plans will result in up to Rs 600 crore loss for JSW Steel for the June quarter. The company is slated to report its earnings on July 24, Friday.
ICICIdirect in its pre-earnings projections on account of Covid-related shutdowns said, JSW Steel’s sales volume will decline 25.8 per cent QoQ, 27.7 per cent YoY to 2.7 MT (metric tonne).
“For Q1FY21, we expect JSW Steel to report a consolidated topline of Rs 12,351 crore, down 37.7 per cent YoY and 30.9 per cent QoQ, while Ebitda is likely to come in at Rs 1,255 crore, down 66.2 per cent YoY and 57.8 per cent QoQ,” the research house said in its report. It added that the loss for the quarter will be Rs 591 crore.
The operating profit per tonne, an important metric to gauge efficiency for steelmakers, will also come down with margins being hit by up to 860 bps.
Emkay Research expects consolidated Ebitda at Rs 5,483/tonne. “We believe overseas acquisition will continue to bleed cash. We do not anticipate any turnaround in these assets in the near term,” it said.
Due to the weak projections, shares of the company are trading down over 20 per cent year-to-date. However, the stock has gained 48 per cent from its lows in April.
ICICIdirect projects consolidated Ebitda margin likely at 10.2 per cent, down from 18.8 per cent in Q1FY20,
Realisations will also be a sore issue for the steelmaker during the quarter. PhillipCapital, which pegs loss at Rs 315 crore, said realisations may be lower by Rs 4,000/tonne.
Among the key things to watch out for will be FY21 volume guidance and management plan on deleveraging, if any; update on BPSL acquisition, and other acquisition in the pipeline; update on integration of Monnet Ispat NSE 2.52 % and lastly, any revised timeline for Dolvi expansion.