Posted on 25 Jul 2023
JSW Steel’s net debt for the June quarter rose to Rs 66,797 crore during the quarter, compared to Rs 59,345 crore in March. Acharya attributed the rise in net debt due to working capital needs but expects this situation to improve from here on.
India’s largest steel producer JSW Steel Ltd. is scouting for iron ore and coal assets globally to ensure raw material security for itself.
JSW Steel reported June quarter results on Friday, wherein it reported a net profit of Rs 2,428 crore, aided by a drop of over Rs 2,000 crore in raw material costs.
In an interaction with CNBC-TV18 post the earnings, JSW Steel’s Joint Managing Director & CEO Jayant Acharya said that the company is interested in Canada’s Teck Coal, but it is too early to comment on the status of the same.
“We are looking at raw material security and our aim is to have iron ore security and gold security as we build our capacities in India,” Acharya said. “Teck is one of the assets we have looked at. However, there is nothing at this point of time I can comment. It is just an initial feasibility study which we are doing,” he added.
Bloomberg had reported last week that JSW Steel is considering a bid for as much as 20 percent stake in Tech Resources’ steelmaking coal business, citing people with knowledge of the matter. The report further stated that the discussions are preliminary and that JSW is also in discussions with banks over potential financing for the acquisition, which may total to around $2 billion.
JSW Steel had also expressed interest in acquiring NMDC Steel, the demerged entity from NMDC and acharya had mentioned back in May that it will look at that asset as long as it is value accretive. While he did say this time that they are interested in the asset, they are yet to know about the status of the bids.
The company’s overseas operations turned in operational profitability for the quarter, with overall overseas EBITDA coming in at Rs 570 crore. But Acharya sees some challenges going forward to these levels due to global operational profitability.
Acharya also mentioned that JSW Steel’s consolidated EBITDA per tonne at Rs 12,345 is higher on a sequential basis, which were aided by better export bookings and value added products. Although coking coal costs increased to $285 per tonne from $274 in March, Acharya expects it to drop by 45-50 per tonne in the September quarter.
However, the Joint MD & CEO of JSW Steel expects domestic realisations to be under some pressure in the coming quarters as global prices have corrected, but went on to add that the global prices have bottomed out.
JSW Steel’s net debt for the June quarter rose to Rs 66,797 crore during the quarter, compared to Rs 59,345 crore in March. Acharya attributed the rise in net debt due to working capital needs but expects this situation to improve from here on.
“We expect once the merger of JISPL (JSW Ispat Special Products) is completed we expect about Rs 3,000 crore of debt to get consolidated. However, we are looking forward to reducing the working capital impact which has gone up and therefore the debt closing for this year would be in a in a situation better than what you probably seeing today,” Acharya said.
Brokerage firm JPMorgan mentioned in its note that it likes the company’s attractive volume growth pipeline, but expensive valuations keep it on the sidelines. It maintained a neutral rating on the stock with a price target of Rs 730.
Shares of JSW Steel are trading 0.6 percent lower at Rs 785.30.
Source:CNBC
