JSW Steel’s Q3 Profit Decline Expected to Hit 85%
Sajjan Jindal-led JSW Steel is expected to face a significant slump in its financial performance for the December quarter, with several brokerage firms forecasting a sharp year-on-year decline in its net profit. Analyst estimates suggest that the company’s net profit could fall by as much as 65-85 percent in Q3 FY25, dropping to anywhere between ₹300 crore and ₹760 crore, primarily due to lower steel realisations.
The revenue for the quarter is projected to range between ₹38,500 crore and ₹41,700 crore, indicating a moderate contraction. Kotak Institutional Equities predicts a substantial 68 percent year-on-year drop in JSW Steel’s net profit, forecasting the figure to touch ₹762 crore. Alongside a decline in profit, the company is also expected to report weaker operational performance, with EBITDA predicted to fall by approximately 25 percent compared to Q3 FY24. Kotak has reduced its estimates for standalone volume growth, projecting it to rise by just 5 percent year-on-year, a slowdown from previous expectations.
Analysts at Kotak have highlighted a 13 percent decline in steel realisations on the back of weak flat steel prices during the quarter. The brokerage also expects standalone EBITDA to fall to ₹8,526 per tonne, a decrease of 23 percent from the previous year, driven largely by lower hot-rolled coil (HRC) realisations, which were only partially offset by lower coking coal costs. On the other hand, Nomura has revised its consolidated EBITDA estimates for the quarter, lowering its expectations by 21 percent as a result of weaker-than-anticipated volumes and HRC prices. Nomura also notes that while JSW Steel attempted to raise prices in India during October, domestic HRC prices have since fallen by ₹2,500 per tonne, leading to lower realisation than initially expected.
Despite these setbacks, Nomura has maintained its ‘Buy’ rating for JSW Steel, with a revised price target of ₹1,220. Meanwhile, Nuvama, another brokerage, predicts an even steeper fall in the company’s profits, estimating an 87% year-on-year decline in net profit, forecasting it to drop to ₹320 crore. In summary, while JSW Steel is taking proactive measures to address price volatility, including recent price hikes, its Q3 FY25 results are set to be significantly impacted by declining realisations and weak demand in certain steel segments. The company will need to navigate these challenges to maintain its long-term growth trajectory in the face of a fluctuating global steel market.
