InvestorQ : Can you explain the reason for the sharp growth in JSW numbers in the Sep-20 quarter?
vidhya Laxmi made post

Can you explain the reason for the sharp growth in JSW numbers in the Sep-20 quarter?

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sarah Leo answered.
7 months ago
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It does look like metals demand is picking up due to a mix of domestic and international demand driven factors. For the Sep-20 quarter, JSW Steel reported a 9.63% increase of sales revenues at Rs.19,264 crore. JSW is one of the largest steel manufacturers in India.

For the Sep-20 quarter, the operating profits were sharply up by 95% at Rs.3,265 crore while the net profits fell sharply by 37% at Rs.1,595 crore. However, this is more due to the massive deferred tax credit that JSW Steel got of Rs.1976 crore in Sep-19 making the comparison rather incompatible.

On the margins front, the Sep-20 quarter saw operating profit margins expand by 740 basis points to an attractive 16.95% while NPM was lower at 8.28% due to the deferred tax benefit effect mentioned in the previous paragraph.

It is clear that JSW Steel has largely recouped its pre-COVID levels of operating sales and profits and has actually done better than that. The sharp improvement in operating performance was assisted by a sharp fall in the cost of materials due to weakness in input prices globally.

It reported 30% sequential growth in crude steel output at 3.85 MT and huge 47% growth in saleable steel at 4.12 MT. JSW lowered its debt by Rs.1,635 crore in the Sep-20 quarter reducing the debt/equity ratio to 1.43x. This also resulted in an improvement in the net cash from operations in the H1 of FY21.

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