JSW Steel -Stock Analysis
India’s annual consumption of Steel is now 100mt. India is World 2nd Largest Steel Producer & Growth is driven by domestic demand as well as the availability of Raw Material & Cost-effective labor. It is one of the major contributors to India’s manufacturing OutPut. As we can see around 50 Listed companies but 80% Revenue comes from top 5 & 80% profit from top 2 ie Tata Steel and Jsw Steel the Largest Players.
The industry has grown well during the last 2 decades but the majority of them are in high debt Burden hence making losses, Just a few of them Make Profit and that too with the low average margin of 3%. Hard to Find a company with long profit-making Consistency yet can consider Jswsteel, TataSponge, Tata Metaliks as some of the good ones from the Wealth Destroyer Industry. Even the Current Year trend sales of the majority of the companies are down due to a globally muted economy combined with covid.
Jsw steel is among the lowest cost steel producers of the world. Jswsteel once with revenue and profit of 2000 cr and 500 cr during 2002 is today able to generate revenue and profit of 80000 cr and 5000 cr respectively. Today’s profit is 2X to yesterday’s revenue. Already recommended near 130 just 3-4 Years back and still can add during current fall. We may see Jswsteel enter the elite club of 1 Lakh cr revenue making company till 2025 with 15000 cr plus profits and yes we were expecting this company to enter in Nifty-50 and yes just 2 years back we have already seen this thing. Considering the current slowdown in the economy worldwide lower consumption of Auto as well as consumer durables has been seen which affects the overall steel industry. Current revenue is as expected and revenue has fallen by -13% but Profits fell by -48% which were too low than expected. Margin decreased & debt increased.
The current outlook is not good. All those holding since long can add more in the whole range of 140 to 175 and can hold it for the long term. Best among Metals. India would continue to remain a bright spot in global steel with the highest growth in steel consumption.
Sources:
Various publications
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