Release Date: February 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Steel Authority Of India Ltd (BOM:500113, Financial) registered its best-ever physical performance during the nine months of FY24, with saleable steel production increasing by 9% over the corresponding period last year (CPLY).
- The company achieved an EBITDA of INR 8,451 crores, marking a 41% improvement over CPLY.
- Profit before tax and profit after tax saw significant growth, standing at INR 2,359 crores and INR 1,722 crores respectively, compared to INR 1,157 crores and INR 854 crores during CPLY.
- The Indian steel industry is projected to grow at a rate of 7.7% during the calendar year 2024, providing a positive outlook for domestic consumption.
- The company is making steady progress in operational efficiencies, including reducing coal consumption, increasing the use of CDI, and improving blast furnace productivity.
Negative Points
- The NSR (Net Sales Realization) for mild steel during the period was INR 54,921, which is 6% lower than CPLY.
- Sales turnover for Q3 FY24 decreased by 7% over CPLY and 22% over the previous quarter.
- The company's debt increased to INR 29,000 crores as of January 31, 2024, despite higher sales.
- The saleable steel sales volume for Q3 FY24 stood at 3.813 MT, a reduction of 8% over CPLY and 20% over the previous quarter.
- The EBITDA for Q3 FY24 was INR 2,319 crores, a decline of 43% over the previous quarter.
Q & A Highlights
Q: What was the coal cost for this quarter and the expected cost for Q4?
A: In Q3, the coal cost was INR26,500 per tonne, up from INR22,751 per tonne in Q2. For January, the price was INR26,633 per tonne, expected to remain stable in February and March.
Q: What are the sales volume expectations for the end of the year and next year?
A: We aim to maximize sales but cannot provide specific numbers at this time.
Q: How did demand in January compare to Q3?
A: January sales were approximately 1.5 million tonnes, indicating an improvement over Q3.
Q: Can you detail the trends in flat and long steel prices?
A: In Q3, long steel was INR53,938 per tonne and flat steel was INR56,600 per tonne. In January, long steel was INR51,900 per tonne and flat steel was INR53,000 per tonne.
Q: What is the status of ore inventory liquidation?
A: In Odisha, inventory liquidation is ongoing. In Jharkhand, we have received permission for internal use and have started moving the inventory.
Q: What is the impact of the Odisha ore inventory liquidation on Q3 and 9-month results?
A: Specific figures for Odisha inventory liquidation will be provided offline.
Q: Has Steel Authority considered providing working capital assistance to RINL?
A: No official communication has been received, and no working capital assistance has been provided to RINL.
Q: How will higher volumes in Q4 affect margins given the NSR fall?
A: Despite higher volumes, NSR is under stress in Q4, and it is difficult to predict the exact impact on margins.
Q: What is the current debt level and the target for year-end?
A: As of January, debt is INR29,000 crores. We aim to reduce it to INR23,000-24,000 crores by year-end, but this is challenging due to NSR pressure and coal prices.
Q: What is the CapEx plan for the next year and the target capacity?
A: The CapEx target for next year is INR6,000 crores. We aim to maintain capacity utilization at around 95% and plan to increase capacity to 35 million tonnes by 2030-31.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
