JSW Steel reported record sales and highlighted strong domestic demand during the quarter. In this conversation with NDTV Profit, management discusses what's driving growth, impact of the Middle East conflict, Q2 challenges, and why it expects a much stronger second half of the year. Watch!
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What Jayant Acharya said
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Jayant Acharya, Joint Managing Director and CEO of JSW Steel, discussed the company's strong Q1 FY27 performance, driven by robust Indian steel demand growth of 8.3% and a 15% quarter-on-quarter volume increase. He highlighted strength in automotive, renewables, and rural segments, with renewable steel demand growing 25% year-on-year. Acharya noted that steel prices in India are among the lowest globally and expects better traction in H2, despite seasonal monsoon impacts in Q2. He mentioned that coking coal prices are rising by $12-15 in Q2, with benefits from lower prices flowing into Q3. The company's net debt to EBITDA improved to 1.46, and net debt reduced to around 46,000 crore rupees. Acharya projected Indian steel demand growth of 7-9% for the year, reaching close to 177 million tons, and expressed confidence in JSW Steel's capacity expansions to capitalize on this growth.
Key takeaways
Indian steel demand grew 8.3% in Q1 FY27, driving JSW Steel's 15% quarter-on-quarter volume growth.
JSW Steel's net debt to EBITDA improved to 1.46, with net debt reduced to around 46,000 crore rupees.
Coking coal prices are expected to rise by $12-15 in Q2 FY27, with benefits from lower prices flowing into Q3.
JSW Steel expects Indian steel demand to grow 7-9% this year, reaching close to 177 million tons.
Renewable steel demand grew 25% year-on-year, with JSW Steel expanding solar and wind capacities.
0:05Everyone wants to now know as to what's going to happen with the West Asia crisis as well, but from an earnings perspective, what did the quarter look like?
2:04Are there new areas also developing for the steel companies to take benefit from?
3:48EBITDA has been very strong 23% growth. Is this sustainable?
5:39It has only benefited on the price front, but what about the supply chain and also the volume guidance for the next quarter?
7:42So, how's the raw material prices really putting pressure or how is the outlook looking and the prices?
Interesting set of numbers that we've seen from a metal counter. Everyone wants to now know as to what's going to happen with the West Asia crisis as well, but from an earnings perspective, what did the quarter look like?
So, two important things are really here that really played out. One is the global, you know, price support. It's a global traded commodity and therefore the pricing has been higher because of West Asia. That anyways we had predicted and projected. The second important thing is the demand. Jayant Acharya is joining in from JSW Steel to take us through the quarter. Now, Mr. Acharya, always a pleasure speaking to you on NDTV Profit. Of course, good set of numbers, record sales numbers backed by demand as well as pricing. Take us through the internals in terms of the key factors and the drivers in the quarter.
The quarter one has seen a very strong operational performance. India demand I think was one of the basic drivers. It grew at 8.3% the steel demand. And that has driven good growth. Our capacity utilization excluding BF3 was at 94% and that quarter on quarter basis showed a volume growth of 15%. On production side while on the reported number it's 3.3%. Our sales where consolidated sales were good. We had a good mix of flats where the pricing and the demand was better. The product mix was also helped by value added and special products which helped the overall mix from an EBITDA point of view. The sales realization increase of about roughly 6,500 rupees quarter on quarter was offset partly by higher cost and a better mix as I've explained. So, that has played into a better result for the quarter.
All right. So, good demand really playing out and of course you've written that autos, renewables, these are some of the segments. Tell us where is the demand really surfacing from? Are there new areas also developing for the steel companies to take benefit from?
So, first on the automotive, I think the automotive growth momentum has been really robust post the GST cut in September last year. Auto has been on a roar and I think it continues to do well. What we see is a very good traction in retail on the rural side where the consumption of passenger vehicles, two-wheelers have started moving up. Tractor sales are seeing good traction. I think that's a very strong one on the automotive side. On the renewable side, you're right. We had the highest again quarter here. We grew at 25% quarter-on-quarter. Sorry, YOY in the renewable space. We are expanding as you know all we're trying to go to non-fossil fuel in JSW Steel by 2030-31. Our effort is to see that we have everything through renewable energy. So, we are expanding our capacities on solar and wind ourselves. In addition to that, the renewable energy demand overall in the country as we require more energy for our own self-reliance, I think that overall in India is growing. Our facility plate facility at Anjar, our coated facilities are big suppliers to the renewable space and that is benefiting us overall.
All right. So, demand is strong and coming in from new areas well, but when we talk about pricing, there is a strong support coming in from international prices. EBITDA has been very strong 23% growth. Is this sustainable? Give us an outlook on the pricing as well.
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