Motilal Oswal
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Earnings

Jindal Stainless expects volumes to be better in Q4 as demand picking up

Updated : February 08, 2019 01:04 PM IST

It was a weak quarter for Jindal Stainless. The year-on-year (YoY) revenues were up 4.9 percent but EBITDA was down 41 percent. EBTDA margins too were down 7.3 percent YoY.  Net profit was down 61.1 percent in the quarter at Rs 52.4 crore compared to Rs 134.7 crore same quarter last fiscal. Volumes de-grew YoY on the back of weakness in export and domestic market in Q3.

Discussing the numbers in detail and business outlook going forward, Anurag Mantri, CFO of the company, said that in terms of volumes, Q4 is shaping up better than Q3. The third quarter saw a setback in terms of export demand due to uncertainty on European Union quota, he said, adding that the uncertainty has cleared and demand is on uptick domestically as well due to orders from railways.

Exports constitute 25-28 percent of the total revenues and 50 percent of the exports is to EU, he said. “Jindal Stainless is the only company from India that export to EU on the stainless steel side,” he said.

Talking about the company's exposure to railways, he said, "The total contribution of sales from railways is 10 percent but that is growing rapidly."

"The average realisation price of stainless steel in Q3 stood at Rs 1.53 lakh per metric tonne but going forward we expect better realisations because Nickel prices are inching up," said Mantri.

With regards to debt, he said long-term external debt is around Rs 2,800 crore and the debt-equity ratio is at 1.7 times. The company has paid Rs 400 crore debt in 9 months and will pay another Rs 50 crore in the fourth quarter, he added.
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