JSW Steel is expected to report its Q2FY20 earnings numbers on Wednesday. The company's stock price is a good indication of what to expect from the report. In the last one year, the JSW Steel stock has lost 40 percent of its market capitalization and a sluggish quarter is expected.
On the topline, there is an expectation of de-growth of around 16-17 percent. The profitability will likely fall more and come in around 40 percent, while margins will see a compression to around 15.5 percent which would mean the profit number will also be lower.
There is a de-growth of around 8 percent in production. There is expectation of a big dip in terms of topline because of a couple of factors — sales volumes will be lower and realization will be lower. Sales volume is expected to dip by around 7 percent approximately.
The realizations will likely be lower because of higher exports since exports give lower realizations in comparison to the domestic market and prices in the domestic market are depressed.
The earnings before interest, taxes, depreciation, and amortization (Ebitda) per tonne is expected to be Rs 7,300-7,400 per tonne. The profit numbers get hit because of lower Ebitda number, higher depreciation and higher interest cost.
Beside the numbers, the management commentary will be significant, considering the predicament of Bhushan Power and Steel, as well as any guidance on scaling down sales volume.