JSW Steel declined over 2 percent intraday on Wednesday as investors turned cautious of the stock post the company’s Q1 performance.
The company’s profit in the first quarter fell by 43 percent to Rs 624 crore compared with Rs 1,096 crore in same quarter last year.
However, revenue during the quarter increased sharply by 24 percent to Rs 15,977 crore, with crude steel production up 1 percent at 3.91 million tonnes and saleable steel up 5 percent at 3.51 million tonnes.
The current quarter was marked by industry wide destocking as customers in general adopted a cautious approach towards carrying inventories in run up to GST rollout, which impacted domestic sales volume.
As a result overall steel sales volume stood at 3.51 million tonnes during the quarter with some accumulation of inventory, the company said.
Exports during the quarter surged 26 percent YoY as demand and pricing for steel products in international markets remained buoyant.
Operating profit in Q1 declined 19.6 percent to Rs 2,617 crore and margin contracted by 890 basis points to 16.4 percent compared with same quarter last year.
Brokerage: CLSA | Rating: Buy | Target: Rs 300
CLSA expects margins to improve from Q1 lows for JSW Steel. It sees a case for valuation multiples to expand on better pricing and margin visibility.
Brokerage: Jefferies | Rating: Underperform | Target: Increased to Rs 163
Jefferies expected the margin to improve from June quarter lows, while volume growth could be muted. A new expansion capex would delay deleveraging, while growth may be back ended, it added.
Brokerage: Credit Suisse | Rating: Outperform | Target: Increased to Rs 265
Credit Suisse said that the June quarter did not see full benefit of coking coal price cut with respect to the company. The company, it said, is focussed on maintaining exports at 23 percent. It also is constructive on the stock on the back of improving global
steel prices.
Brokerage: Macquarie | Rating: Neutral | Target: Rs 222
Macquarie said that despite a weak volume run-rate, FY18 volume guidance was maintained. Further, it expects the company to achieve the target set for volume in FY18. There is a strong case for price hike in domestic market, it added.
Brokerage: JPMorgan | Rating: Overweight | Target: Raised to Rs 240
JPMorgan said that the company is well positioned for the upcoming cycle. The stressed asset acquisition would be positive, if done.
The stock has gained over 7 percent in the past one month, while its three day gain stood at 2 percent. At 09:44 hrs JSW Steel was quoting at Rs 220.05, down Rs 2.90, or 1.30 percent on the BSE. It touched an intraday high of Rs 224.20 and an intraday low of Rs 218.05.
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