JSW Steel is primarily engaged in the business of manufacture and sale of Iron and Steel Products. It is the flagship business of the diversified, US$ 23 billion JSW Group. The company's diversified portfolio comprises products under hot-rolled, cold-rolled, galvanneal, galvanized/galvalume, pre-painted, tinplate, electrical steel, TMT bar, wire rod, special steel bar, round and bloom categories under various brands which include JSW Silveron+, JSW Everglow, JSW Colouron+, JSW Pragati+, JSW Vishwas+, JSW Vishwas, JSW Galvos, JSW Galvaceo, JSW Platina, JSW Neo Steel, JSW Trusteel, JSW Avante and JSWE Radiance. The company’s steel products are used in diverse Applications which includes, Buildings (Resi. & Commercial), Roads, Bridges, Metro & other Urban Infra, Airports, High Speed Rail, Shipbuilding, Renewables (Wind + Solar), Power Sector and Roofing Solutions under Infra and Construction segment, Refrigerators, Air Conditioners, Home Appliances, Tinplate for Packaging, Railways & Defence, Alternators, Motors, Compressors, Pumps, Fans,  Generators, Inverters, Yellow Goods, Hopper & Headstock in Wagons, Roof of Railway Locomotive, Cargo Containers, Shell Casings (Defence) Consumer Durables Pipes & Tubes, Oil & Non-Oil Cans, Aerosols, Battery Casings, Paint Containers and Bottle Caps in Consumer Durables segment, Oil & Gas (API grade), Industrial Applications and Agriculture under pipes and Tubes segment, Alternators, Motors, Compressors, Pumps, Fans, Generators, Inverters and Yellow Goods in General Engineering segment, Hopper & Headstock in Wagons, Roof of Railway Locomotive, Cargo Containers  and Shell Casings (Defence) under Railways & Defence segment, Outer skin panels,  Connecting Rod, Axle Shafts, A&B Pillars, Cross Beams, Suspensions & Chassis, Bumper Cross Member, Seat Rails, Seat Belt Tongue and Door Impact Beams in Automotive segment.

As of Q3FY24, the company has 15 manufacturing facilities in India with a total capacity of 28.2mt. Vijaynagar Works - 23.5 MnTPA, BPSL - 3.5 MnTPA and JISPL - 1.2 MnTPA.  The Company’s manufacturing unit in Vijayanagar, Karnataka is the largest single location steel-producing facility in India with a capacity of 17.5 MTPA. Company also has manufacturing capacities in USA and Italy. Average Indian capacity utilization of its manufacturing units stands at 94%. The company is present in 17,500 retail stores across more than 530 districts in India. It has a strong distribution channel of 2,475 points including 450 distributors and 2,025 Branded Stores, 706 JSW Shoppe spread across urban areas, and 1,319 JSW Shoppe Connect in semi-urban and rural areas. It has enrolled 82,000+ partners in JSW Privilege Club and 14 Experience Centres across India.

Company’s JSW ONE business which acts as a One-Stop Digital Marketplace for MSMEs and Home Solutions experiences Strong Consumer traction and amazing customer base with 67,600 Registered customers, 2400+ Transacted customers base, 1,73,700+ Visits on platform with 80% repeat customers and 11000+ Total number of orders in recent quarter. It has also reported significant growth in volumes and GMV as its Steel volumes reached 4,83,000 MT up by 25% QoQ and Cement volumes reached 59,000 MT Up by 33% QoQ compared to previous quarter.

The company has also planned to expand capacity to 37mt by FY25- 26 and eventually to 50mt by FY30 through:

1) Brownfield expansion of ~5mt at each of Vijayanagar, Dolvi and BPSL

2) 4mt Green Steel in 2 phases

3) Greenfield growth in Odisha (13mt)

4) Greenfield EAF at Kadapa, Andhra Pradesh.

The Group also has interests in energy, infrastructure, cement, paints, sports, and venture capital.   

Fundamentals:

Financial Results:

Company has reported Highest ever quarterly Domestic sales, Highest ever quarterly Institutional segment sales, up 8% YoY, Highest ever sales to Auto segment, Highest ever sales to Renewable segment, up 39% YoY, Highest ever Long Product sales, up 26% YoY and Highest ever sales to Appliance and Tinplate segments, up 37% and 51% YoY, respectively in Q3Fy25.

Company has reported Rs. 41378 Cr. Revenue from operations in Q3Fy25 which is 4.26% higher on QoQ basis and EBITDA also reached 5579 in Q3Fy25 from 5437 in Q2Fy25. Its PBT reached Rs. 1178 Cr. surging by 49% compared to previous quarter and its PAT also reached 719Cr. surging by 77% compared to Q2Fy25.  

Company’s Domestic sales up 14% YoY, while Exports remained flat YoY in Q3 FY25. Retail segment’s sales were up by 26% YoY and 14% QoQ due to fall in imports. The revenue share from Value added steel products was 35% in FY16 which has increased to 60% in Q3FY24. The company aims to maintain this by >50% in future years. The company added 154 new branded stores in new towns and 126 existing towns.

Steel manufacturing sector of India is experiencing a Strong Demand Tailwinds from Infra and Construction. India has National Infrastructure Pipeline of US$2.1 trn aided by Increasing share as a % of GDP from ~15% to 25% by 2030 and supported by PLI scheme targeted to promote manufacturing. Under PM AwasYojana-41mn houses have been sanctioned (11.8mn Urban & 29.4mn Rural), with 35mn completed and further 30mn announced over the next 5 years. Energy transition from fossil fuel to Renewable Energy, Green H2and EV ecosystem is also playing vital role in growth of Steel sector of Inda. Under Vishit Bharat 2047 program the govt has planned 53% urbanization which is currently at 35%, 20 bn+ passengers in railways which are currently at 8 bn+ passengers, 300k km of Highway which is currently at 145k Km, 10,000 mtpa Handling Capacity of Ports which is currently at 2,500 mtpa Handling Capacity, 300 Airports and 1.5 bn+ trips which is currently at 138 airports and 200mn+ trips and 7,000 km metro rail from current metro rail line of 700km. Growth of Automobile sector in India is also playing a vital role in growth of Steel industry. Govt. aims India to be the world’s second largest vehicle producer by 2032 with Auto-components export target of US$100bn by 2030, from US$21bn in FY24. 

However, JSW Steel also faces challenges due to increased imports of cheaper steel from countries like China, South Korea, and Japan. These imports have pressured domestic prices and impacted profit margins. In response, the company, along with other Indian steelmakers, has advocated for temporary safeguard duties to mitigate the impact of these imports. ​

Looking ahead, JSW Steel is poised for growth, with plans to increase capacity by 10% CAGR over the next seven years, supported by a capex outlay of ₹65,000 crore in the next three years. This expansion aligns with the anticipated robust domestic demand driven by significant infrastructure development in India. JSW Steel's strategic initiatives and operational strengths position it well to navigate current challenges and capitalize on future opportunities in the steel industry. Investors may look to invest in this company for long term period.

HET ZAVERI

info@smartinvestment.in

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