JSW Steel Shows Stable Performance Amidst Rising Leverage and Profitability Challenges

JSW Steel has recently undergone a financial trend adjustment, reflecting a more stable performance in its latest quarter ending March 2025. The company reported a notable operating profit to interest ratio, reaching 3.05 times, alongside a robust PBDIT of Rs 6,378 crore. Additionally, the operating profit to net sales ratio stood at 14.23%, indicating effective cost management and operational efficiency. The profit before tax, excluding other income, grew to Rs 1,544 crore, marking a 21.1% increase compared to the previous four-quarter average, while the profit after tax reached its highest at Rs 1,541.18 crore, translating to an earnings per share of Rs 6.16.
However, challenges remain for JSW Steel. The profit after tax over the latest six months has declined by 37.51%, and the return on capital employed is at a low of 7.84%. The debt-equity ratio has risen to 1.24 times, indicating increased leverage, while the debtors turnover ratio has dropped to 19.80 times, suggesting potential issues in receivables management.

In terms of market performance, JSW Steel has outperformed the Sensex over various time frames, particularly in the long term, with a remarkable 506.07% return over the past five years compared to the Sensex's 166.43%. This trend highlights the company's resilience and ability to navigate market fluctuations effectively.