Shares of JSW Steel rose over 3 per cent today despite the steelmaker reporting a weak set of earnings for the quarter ended September 2022. Losses of the JSW Group firm widened by 112 per cent in the last quarter. However, revenue zoomed over 28 per cent in the September quarter on a year-on-year basis, which led to positive sentiment around the stock.
JSW Steel stock gained up to 3.4 per cent to Rs 650.6 against the previous close of Rs 629.20 on BSE.
The stock has been climbing for the last two sessions. However, in a month, the stock has lost 3.31 per cent and declined 4 percent in a year. It hit a 52-week high of Rs 789.95 on April 19,2022 and a 52-week low of Rs 520.10 on May 26, 2022.
Total 6.13 lakh shares of the firm changed hands amounting to a turnover of Rs 38.66 crore on BSE. The market cap of the firm rose to Rs 1.56 lakh crore on BSE. Later, the stock closed 2.34 per cent higher at Rs 643.90 on BSE.
Sajjan Jindal-led JSW Steel reported a 112.74 per cent year-on-year fall in consolidated net profit after tax to a loss of Rs 853 crore in the September quarter led by a sharp fall in steel prices. Net profit came in at Rs 7,179 crore in the year-ago period.
However, revenue rose 28.54 per cent to Rs 41,778 crore in Q2 as against Rs 32,503 crore in the corresponding quarter last year.
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Total expenses rose 78.7 per cent to Rs 43,354 crore compared to Rs 24,261 crore earlier. “Despite a challenging global economic scenario, we expect healthy steel demand growth in India during H2 FY23, which along with the flow through lower raw material prices, should aid the company’s performance in the coming quarters,” JSW Steel said.
JM Financial is bullish on the stock and reiterated its buy stance with an unchanged target at Rs 610. “The company continues to aggressively add capacity across facilities – a) Vijaynagar expansion to be completed by FY24 end b) downstream projects at Vasind and Tarapur as well as expansion at BPSL to 3.5mtpa were commissioned during 2QFY23 c) BPSL Phase-II expansion (from 3.5mtpa to 5mtpa) is expected to be completed by FY24. Spot / 3Q spreads have improved from the troughs of 2Q. Maintain BUY,” the brokerage said.
Morgan Stanley is underweight on the stock after Q2 earnings. It assigned a target price of Rs 490. “The firm reported standalone EBITDA of Rs 1740 crore (-80% YoY/-48% QoQ). EBITDA per tonne stood at Rs3,477 per tonne against Rs 8,318 per tonne last quarter. Realization came in at Rs 64.9K/tonne, down from Rs 77.2K/tonne last quarter, ” said Morgan Stanley.
However, overall revenues climbed to Rs 32500 crore, rising 16% YoY and 4% QoQ.
Japanese brokerage Nomura has assigned a reduce call to the stock with a target price of Rs 570. “2Q was weak; impacted by higher than estimated effect of raw material costs with PBT losses. While margins may improve from 3Q, steel prices may remain under pressure as export duties continue. We cut FY23F/FY24F EBITDA by 21%/5%,” said Nomura.
CITI has a neutral stance on the stock with a target price of Rs 625.
“2Q standalone EBITDA fell 80% yoy hurt by 12% drop in steel realisations & higher costs (+20%), Volumes rose 32% yoy. EBITDA per tonne came at Rs 3500 vs Rs 8300 in 1Q & Rs 22,900 last year,” said CITI.
