JSW Steel Q4 Profit Dives 65% YoY, Brokerages Express Bearish Outlook

Despite JSW Steel reporting a significant 64.5% decline in net profit for the quarter ending March, brokerages maintained their negative outlook on the company's stock. As of 9:20 am IST, JSW Steel shares were trading at ₹891.8 on the NSE, showing a slight 0.1% increase.

JSW Steel's net profit experienced a substantial decline of 64.5% year-over-year, reaching ₹1,299 crore in the quarter ending March 31, 2024. The company's revenue witnessed a modest decrease of 1.5%, from ₹46,962 crore in the previous fiscal to ₹46,269 crore in the quarter under review. The decline in both net profit and revenue is attributed primarily to elevated coking coal prices and reduced realizations amidst subdued domestic steel prices.

Consolidated crude steel production in the quarter stood at 6.79 million tonnes while the company spent consolidated CapEx of ₹3,503 crore in Q4FY24.

Morgan Stanley maintained its recommendation of 'underweight,' setting a target price of ₹650 per share. This target price implies a potential decline of approximately 27.4% from the preceding closing price. The brokerage firm anticipates no substantial growth in FY25, despite the possibility of increased domestic demand after the elections. A significant risk associated with JSW Steel is the elevated level of steel imports from China.

Citi reiterated its 'sell' rating for JSW Steel. Despite the sell rating, Citi increased its target price for JSW Steel to ₹750 per share. The new target price represents an 18.4% decrease from JSW Steel's current market price. Citi anticipates that JSW Steel's expanded capacities will fully materialize in fiscal year 2026.

Kotak Institutional Equities downgraded its rating to 'reduce' due to subdued steel spreads negatively impacting JSW Steel's margins. Despite the previous decline, steel spreads have stabilized, and the brokerage anticipates an improvement in margins during Q4.

Over the past year, JSW Steel shares have risen around 27%, as compared to a 23% gain in the frontline index Nifty 50.

Analysts anticipate a significant increase in production and sales due to continued expansions, robust domestic steel demand, and escalating export prospects. Analysts at Motilal Oswal Financial Services Ltd. predict that JSW's domestic sales volumes will remain strong as its capacities expand, product offerings improve, and export opportunities arise.

The flagship company of  JSW Group, JSW Steel is one of India’s leading integrated steel manufacturers with a capacity of 18 MTPA. It is one of the fastest growing companies in India with a footprint in over 100 countries. With state-of-the-art manufacturing facilities located in Karnataka, Tamil Nadu and Maharashtra, it is recognized for its innovation and quality.

JSW Steel has also entered into a joint venture with Marubeni-Itochu Steel Inc. Tokyo, to set up a state–of-the-art steel processing centers.To strengthen its global network, the Company has also acquired a Pipe and Plate making steel mill in Baytown, Texas in USA. By end of next decade, JSW Steel aims to produce 40 million tons of steel annually.