JSW Steel Q4 Profit Beats Estimates
Indian steelmaker JSW Steel has reported a Q4 profit of INR 15.2bn ($225m), beating analysts’ estimates due to higher sales volumes and improved margins. The company had expected the recent debt reduction exercise will help achieve better operational and financial performance. JSW Steel aims to improve its debt-to-equity ratio to 1.5x from the current level of 1.7x, in part by generating better free cash flows. The company also noted plans to invest INR 45,000 crore ($6.7bn) in expanding its capacity to 40m tonnes per annum by 2022.
NTPC Results in Line with Expectations
Indian state-run power company NTPC posted 12% YoY growth in net profit for Q4 to INR 2,843 crore ($420m), broadly in line with market expectations. NTPC, which had reported a net profit of INR 2,540 crore a year ago, saw total revenue rise 18% YoY to INR 21,693 crore ($3.2bn), driven by improved coal production. The company aims to reduce its debt-to-equity ratio to 0.5x, in part by selling power to neighbouring countries, and boost power generation capacity 21.1% to 130 gigawatts by 2032.
Other Earnings Results
In other earnings news, India’s Reliance Communications posted a net loss of INR 20.2bn ($299m) in Q4, due to intense price competition and debt pressure. TVS Motor Company posted a higher-than-expected Q4 profit of INR 1.3bn ($19m), while Piramal Enterprises reported a Q4 profit of INR 456 crore ($67m), up 23% YoY.
JSW Steel’s stronger-than-expected Q4 profit is a positive development for India’s steel industry. The sector took a hit from cheap Chinese imports flooding the market and a slump in global prices for the metal, and has been slow to recover. However, companies such as JSW Steel have started to see their fortunes improve due to a recovery in demand and supply-side measures such as government protectionism measures. NTPC’s Q4 results indicate the power sector is also in good health. Strong revenue growth for NTPC bodes well for India’s energy sector, which is currently undergoing a revival in light of the government’s plan to generate 40% of electricity from non-fossil fuel sources by 2030.
JSW Steel’s Debt Reduction Plan to Boost Performance
JSW Steel’s debt reduction plan is significant and expected to boost the company’s operational and financial performance over the coming years. The company aims to improve its debt-to-equity ratio from current levels of 1.7x to 1.5x, generating better free cash flows. This will, in turn, help the company invest further in expanding its capacity to up to 40m tonnes per annum by 2022. The expansion plan is aimed at further increasing JSW Steel’s market share in India’s buoyant steel sector.
NTPC Begins Plans for Debt Reduction
NTPC’s plans to reduce its debt-to-equity ratio from the current levels of 1.6x to 0.5x are already underway. The company plans to achieve this partly through the sale of power to neighbouring countries. Furthermore, the company aims to expand power generation capacity by 21.1% to 130 gigawatts by 2032, signalling the company’s faith in the strength of India’s energy sector.
Reliance Communications’ Losses Reflect Industry Woes, Competitive Pressure
Reliance Communications’ Q4 losses of INR 20.2bn reflect the current pressures on the Indian telecommunications industry, which is coping with intense price competition and debt problems. The sector is also facing prolonged instability following the entry of Reliance Jio into the market, which has caused major disruption. Further, Reliance Communications has been constantly struggling with debt pressure, causing the company’s credit ratings to be downgraded by Credit Rating Information Services of India (Crisil) and Fitch Ratings.
TVS Motor Company’s Positive Earnings Surprise
TVS Motor Company reported a higher-than-expected Q4 profit of INR 1.3bn ($19m), beating analysts’ estimates. Higher revenue and improved margins were seen as helping to boost the company’s bottom line.
Piramal Enterprises’ Strong Q4 Performance
Piramal Enterprises reported a strong Q4 performance, with profit up 23% YoY to INR 456 crore ($67m). Piramal’s performance was driven by revenue growth in its financial services unit, which benefited from increased lending to infrastructure projects. This suggests that Indian infrastructure projects may provide the future revenue streams for some of the country’s biggest firms.
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