Dikhyaa Mohanty 
Jindal Steel and Power Ltd (JSPL)’s output rose 31% year-on-year (YoY) to 13.71 lakh tonnes during Apr-May but sales took a hit due to lockdowns inflicted by state governments to contain the second wave of the pandemic.
According to the official report, the company stated that the slowdown in domestic construction activities due to COVID-19 and logistical challenges faced owing to overcrowding at ports due to unpropitious weather conditions resulted in sales growth staggering production growth.
To counter this demand slowdown, steel companies have resorted to exports. JSPL has been in the business of exporting value-added steel, with overseas shipments accounting for 21% of sales volumes in April and 36% in May. Share of exports rose to 27% in the fiscal fourth quarter (Q4FY21) from 21% in 3QFY21.
Domestic steel mills lately escalated prices of HRC (Hot Rolled Coil) by Rs3,000/tonne (up 4%) for June deliveries. The continued rise in prices has been the driving factor behind the strong performance of steel manufacturers. JSPL reported its highest ever consolidated Ebitda of Rs5,287 crore in Q4FY21 against Rs4,579 crore in the December quarter. Revenue from operations rose 13% sequentially to Rs11,881 crore.
Concurring, analysts at Motilal Oswal Financial Services Ltd stated that they expect the regional demand-supply balance to remain tight, which should keep spreads elevated for India’s steel mills. Hence, the recent correction in steel stocks will be temporary, feel analysts.
JSPL, with its strong earnings growth, also remains well placed to reduce its debt. The company’s consolidated net debt has come down to Rs19,332 crore after payment of Rs2,462 crore In May and the management plans to reduce debt to Rs15,000 crore by end of FY22.
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