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JSW Steel share slips 4% despite strong Q4 show

The steel manufacturer posted the highest ever consolidated operating earnings before interest, tax, depreciation, and amortisation (EBITDA) at Rs 20,141 crore in FY21, up 70 per cent Y-o-Y

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Share of JSW Steel declined nearly 4 per cent to hit an intraday low of Rs 672.30 despite strong earnings. The Indian steelmaker on Friday recorded consolidated profit of Rs 4,198 crore in Q4 against a loss of Rs 672 crore in the year-ago period. Total revenue from operations during Q4 FY21 stood at Rs 26,934 crore, up 51 per cent as compared to Rs 17,887 crore in Q4 FY20.

The share opened 0.17 higher at Rs 699.00 against the previous close of Rs 697.80. At 14:05 hours, the stock was trading at 683.75, down 2.01 per cent on BSE.

The share has gained 309 per cent in one year and risen 76 per cent since the beginning of this year. JSW Steel's share stands higher than 50 day, 100 day, and 200 day moving averages and lower than 5 day, 10 day and 20 day moving averages. Market cap of the firm fell to Rs 1,64,467.68 crore.

The stock touched a 52-week high of Rs 773.00 on May 10, 2021, and a 52-week low of Rs 163.60 on March 22, 2021. Currently, it is trading 316 per cent above its 52-week low and 12 per cent below its 52-week high.

CLSA has maintained an Outperform call on JSW Steel with a target price of  Rs 740 per share. It further said that the valuations look fair at 2.4x FY23 PB.

Morgan Stanley has raised the target price to Rs 920 per share from Rs 590 earlier as it believes the Indian steelmaker is well-positioned to deliver among the strongest volume growth.

However, Kotak Institutional Equities has downgraded the stock to reduce from buy as valuations are rich. The brokerage house has a target of Rs 640 per share.

The firm posted a 96 per cent rise in consolidated profit at Rs 7,911 crore for the financial year ended March 31, 2021. 

The steel manufacturer posted the highest ever consolidated operating earnings before interest, tax, depreciation, and amortisation (EBITDA) at Rs 20,141 crore in FY21, up 70 per cent Y-o-Y.

JSW Steel also plans to spend Rs 47,457 crore towards capital expenditure in the next three years, primarily for adding 5 million tonnes per annum (MTPA) steel making capacity at Vijayanagar, Karnataka, and building mining infrastructure in Odisha.

The new projects will cost the company Rs 25,115 crore, while the ongoing investments, including doubling of capacity at Dolvi in Maharashtra to 10 MTPA, will require Rs 22,342 crore.

The company has a net debt of Rs 52,615 crore, post Rs 19,350-crore acquisition of the bankrupt Bhushan Power in March. The net debt to equity of the company stood at 1.14 times, while net debt to EBITDA was at 2.61 times.