In today’s briefing:
- JSW Steel – Earnings Flash – Q2 FY 2022-23 Results – Lucror Analytics
JSW Steel – Earnings Flash – Q2 FY 2022-23 Results – Lucror Analytics
JSW’s Q2/22-23 results continued to disappoint in our view, with very weak profitability due to a plunge in steel prices. Raw material prices remain high. At this pace, Gross Debt/EBITDA may reach 5x at FYE 2022-23. Liquidity is sound, with a large cash position. We revised our FY 2022-23 margin forecast downwards to reflect the weaker than expected operating environment.
We are concerned about JSW’s large capacity expansion programme and capex plan, which may not be appropriate given the deteriorating market conditions. Peer Tata Steel appears more shielded from adverse raw material costs (thanks to its deeper vertical integration), and is also more conservative in terms of debt management (it has reduced debt by USD 1 bn p.a.) as well as capacity expansion.
We do not expect rating pressure in the near term, but remain cautious in the medium term.
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