JSW Steel expects margins to improve in FY25 on cooling input costs: Joint MD

JSW Steel is anticipating improving margins in the ongoing fiscal year, thanks to several factors such as cooling input costs, rising steel prices, and enhanced operational efficiencies. According to Jayant Acharya, the joint managing director and chief executive of JSW Steel, the company had a strong financial year in FY24 despite facing challenges in Q4. Looking ahead to FY25, Acharya expressed optimism about the company's performance.

Easing Cost Pressures and Increasing Steel Prices

One of the key drivers behind the expected improvement in margins for JSW Steel is the reduction in input costs. Acharya highlighted that costs are expected to decrease while steel prices are on the rise following a period of stabilization. The company is also focusing on operational efficiencies and cost-saving initiatives to further enhance its margins and absolute Ebitda.

Impact of National Elections on Sales Volumes

Acharya also mentioned that the ongoing national elections are expected to have an impact on sales volumes. With elections underway, there is an anticipation of a pickup in sales volumes once the political landscape settles.

Challenges of High Input Costs and Imports

Despite the optimistic outlook for FY25, JSW Steel faced challenges in Q4FY24, with a significant decrease in profit due to high input costs and other expenses. The company's cost of raw materials consumed increased, impacting its consolidated Ebitda and operating margin. Additionally, the growing imports from China pose a concern for JSW Steel, as India's domestic demand is expected to rise while global demand increases.

Focus on Export Markets and Expansion Plans

JSW Steel is keen on maintaining its share of exports as a proportion of total sales volume and plans to focus on markets like the Middle East for infrastructure manufacturing growth. The company has proposed substantial capital expenditure for FY25 to expand its manufacturing capacity aiming for 50 mt by 2030. Despite a significant net debt, JSW Steel remains confident in its expansion plans, with a focus on managing its financial ratios.

Acquisition of Mineral Assets and Refinancing Debt

In a strategic move, JSW Steel recently acquired Minas de Revuboe Limitada (MDR), a premium hard-coking coal mine project in Mozambique. The company plans to develop the mine after the acquisition process is complete. Additionally, JSW Steel will evaluate various options for refinancing its maturing debt to optimize borrowing costs and ensure financial stability.

In conclusion, JSW Steel's outlook for FY25 appears positive, with a focus on improving margins through cost efficiencies, rising steel prices, and strategic expansions. Despite challenges in the operating environment, the company remains resilient and adaptive, positioning itself for sustained growth in the steel industry.