The shares of a leading fully integrated steel company and one of the largest steel manufacturers in the private sector in Eastern India slumped by 3.2 percent to reach an intraday low at Rs. 908.55, during the trading session of Monday.
Stock Performance:
With a market capitalisation of Rs. 16,576.5 crores, the shares of Jai Balaji Industries Limited (JBIL) reached an intraday high at Rs. 947.2, up by about 1 percent, as against its previous closing price of Rs. 938.9.
The stock has delivered positive returns of nearly 50 percent of returns in one year, while around 4.5 percent of negative returns in the last six months. So far in 2024, the shares of Jai Balaji Industries have given positive returns of about 16.7 percent.
Management Guidance:
The company plans to focus more on DI Pipes, Specialized Ferro Alloys, and value-added products, to drive margin expansion. It aims to increase its DI Pipes capacity by 120 percent, reaching 6.6 lakh TPA, while Ferro Alloys capacity is set to grow by 14 percent, reaching 1.9 lakh TPA.
The company has achieved its target of increasing the utilization rate above 90 percent, with the goal of maintaining this level moving forward.
The management’s strategy focuses on expanding Value-Added Products, such as Ductile Iron Pipes and Specialized Ferro Alloys, to ensure both margin growth and sustainability. JBIL plans to position itself as a leader in Value-Added and Specialized Products.
For FY25, the company anticipates revenue growth of 25-30 percent, an EBITDA margin of 17-18 percent, net term debt of Rs. 225-250 crores, capital expenditure of Rs. 300-350 crores, and DI Pipes production of more than 4 lakh tons.
The company has a robust capex plan of Rs. 1,000 crores, of which Rs. 698.7 crores has already been utilized from internal accruals. The remaining capex is expected to be completed over the next nine months, funded entirely through internal accruals.
Jai Balaji Industries aims to achieve a net-term debt-free status within the next 12 months. The company anticipates that the revenue contribution from value-added and specialized products, such as DI Pipes and Specialized Ferro Alloys, will increase from 45-55 percent to 80 percent.
The company remains highly optimistic about H2 FY25, expecting strong results driven by strategic capital investments in value-added products. Its focus will continue to be on strengthening the value chain, particularly in DI Pipes and Ferro Alloys, which are expected to play an increasingly significant role in both top-line and bottom-line growth.
Proposed capacity enhancement:
The company’s specialised products include DI Pipes and Ferro Alloys, while the other products include Blast Furnaces, Sinter, BFG Boiler and miscellaneous De-Bottle Necking.
DI Pipes: The existing capacity is 3 lakh TPA, with an additional 3.6 lakh TPA planned. Post-expansion, JBIL expects the total capacity to reach 6.6 lakh TPA. A total capex of Rs. 400 crore has been allocated for this expansion, of which a Rs. 164 crore balance is to be incurred. The expansion will be carried out in two phases:
Phase 1 – Out of the 2 lakh TPA capacity, 60,000 TPA has already been commissioned, with the remaining 1.4 lakh TPA expected to be commissioned by FY25.
Phase 2 – The final 2.2 lakh TPA is expected to be commissioned by FY26.
Ferro Alloys: The existing capacity is 1.66 lakh TPA, with a planned addition of 24,000 TPA, bringing the total capacity to 1.9 lakh TPA after expansion. A capex of Rs. 150 crores has been allocated for this expansion, with Rs. 42 crores balance to be incurred.
Under Phase 1, 36,000 TPA of additional capacity was already enhanced by the end of FY24, and the remaining capacity will be commissioned by Q1 FY26.
Revamping Existing Blast Furnaces (Unit lll): The existing capacity is 6.3 lakh TPA, with an expansion of 1.2 lakh TPA planned. After expansion, JBIL expects the total capacity to reach 7.5 lakh TPA. A total capex of Rs. 250 crores has been allocated, of which Rs. 108 crores remains to be spent. The first furnace has already been commissioned, and the second furnace is expected to be completed by Q1 FY26.
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Financials:
The company reported a marginal growth in consolidated revenue from operations, experiencing a year-on-year increase of nearly 0.6 percent, rising from Rs. 1,547 crores in Q2 FY24 to Rs. 1,557 crores in Q2 FY25.
In contrast, during the same period, the company’s net profit decreased from Rs. 202 crores to Rs. 153 crores, representing a decline of around 24.3 percent YoY, owing to deferred tax provisions.
Revenue and profitability have declined on a quarter-on-quarter basis due to lower production and reduced sales realizations of finished products, such as TMT Bars, Pig Iron, and Sponge Iron. However, the company has managed to sustain its margins in value-added products.
The adjusted EBITDA for Q2 FY25 reached Rs. 231.6 crores, representing an increase of around 10 percent YoY from Rs. 210.4 crores in Q2 FY24, with an adjusted EBITDA Margin of 15 percent, up from 14 percent, during the same period.
In order to increase the liquidity of its stock, the company has announced a sub-division/split of its equity shares of face value of Rs. 10 each paid up into 5 equity shares of face value of Rs. 2 each.
Key Financial Ratios:
In terms of key financial metrics, Jai Balaji Industries has a Return on Equity (RoE) of 90.2 percent and a return on capital employed (RoCE) of 63.6 percent. Additionally, the company’s debt-to-equity ratio stands at 0.22.
Shareholding Pattern:
As per the September 2024 shareholding pattern, the Promoters hold a 64.84 percent stake in the company, Foreign Institutional Investors (FII) hold a 3 percent stake, while Retail Investors and Domestic Institutional Investors (DII) hold a 32.05 percent and 0.09 percent stake in Jai Balaji Industries, respectively.
About the Company:
Incorporated in 1999, Jai Balaji Industries Limited is primarily engaged in the business of manufacturing Iron and Steel products including Sponge Iron, Pig Iron, Ductile Iron Pipe, Ferro Chrome, Billet, TMT bars, Coke and Sinter with captive power plant.
The company has four integrated steel manufacturing units present across West Bengal and Chhattisgarh. It was the first company in West Bengal to set up Sponge Iron & Waste Heat Recovery Power Plants.
Written by Shivani Singh
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