JSW Steel reported an increase of 9.63% in top line sales revenues for the Sep-20 quarter at Rs19,264cr. The operating profits for the quarter ended Sep-20 was 95.04% higher at Rs3,265cr while the net profits fell by just 37% at Rs1,595cr on a yoy basis. However, this net profit may not be comparable as JSW has a hug deferred tax credit in Sep-19 quarter.
This had a logical impact on the margins of the company. For the Sep-20 quarter, the operating profit margins or OPM expanded by 740 basis points at 16.95% while the net profit margins or NPM for the quarter was lower at 8.28%. However, this was more due to the Rs1976cr deferred tax credit that JSW Steel got in the Sep-19 quarter.
Financial highlights for Sep-20 compared yoy and sequentially
|Particulars||Sep-20 Quarter||Growth (yoy)||Growth (qoq)|
|Operating Profit||Rs3,265cr||+95.04%||Not Applicable|
|Net Profits||Rs1,595cr||-37.11%||Not Applicable|
|Key Ratios||Sep-20 Quarter||Sep-19 Quarter||Jun-20 Quarter|
|Net Profit Margin||8.28%||14.43%||-4.94%|
Key takeaways from the Sep-20 quarter results
JSW Steel seems to have largely recouped its pre-COVID levels of operating sales and profits and a little more. Sequential growth may not be too relevant in this case. The sharp improvement in operating performance was largely on the back of a sharp fall in the cost of materials used due to global weakness in input prices.
For the first six months of FY21, the net cash generated from operating activities was marginally higher Rs5,685cr, helped by a sharp fall in the interest expense during the half year ending on Sep-20.
In volume terms, JSW Steel reported 30% sequential growth in crude steel output at 3.85 MT, 47% growth in saleable at 4.12 MT. The company lowered debt by Rs1,635cr during the quarter taking the debt/equity ratio to 1.43x and net debt/EBITDA to 4.73x.