JSW Steel Announces Crude Steel Production Figures For Q2FY14

JSW Steel has witnessed a good up move on the bourses in the past two months. The strong financial performance of the company for the June 2013 quarter was the prime reason behind the same. Further the management had stated that the Ispat (It had acquired earlier) is likely break even in FY14. After that the scrip witnessed an up-move to touch current levels of Rs 790 from the levels of Rs 500 in July 2013.

The management at the time of announcing June quarter results had stated that, it is expecting the increased production levels in FY14. Now if the September quarter production figures are anything to go by, the company seems to be right on the track to achieve the same.

For the quarter ended September 2013 the crude steel production of the company stood at 2.98 Million tomes. This resulted in an increase of 37 % over the similar period last year. For Q2FY13 (September 2012 it had produced 2.17 million tonne of crude steel).

However the important factor is the production has increased on account of amalgamation with Ispat. But even if we adjust for the same the growth still stands good and healthy at 6 %. The Company achieved Crude Steel production of 5.84 million tonnes in the first half of FY 2013-14, showing a growth of 35% (on Pro forma basis 3%) over corresponding period of last year.

With the commodity cycle turning up again we feel the steel companies are also likely to get on the track soon. With increased demand and sustained production levels the financial performance of the company is likely to be better for September quarter as well. We feel investors can buy the scrip at current levels keeping a long term view.