JSPL becomes greatest wealth creator globally in the steel sector even amidst global pandemic

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The COVID-19 pandemic left a crippling impact both in India and across the globe as the economy took a brutal hit by the unprecedented slowdown due to months of complete lockdown. However, Naveen Jindal-led JSPL became a shining example of how to detect an opportunity even in the midst of a crisis of extraordinary proportions, making the steel giant the greatest wealth creator in the world.

When big giants from different industries in India were struggling with their production and sales, the JSPL took a conscious decision to keep its mills running as the company shifted its attention to export by targeting markets such as South East Asia, Middle East and Europe primarily to offset the loss in domestic volumes.

The company’s decision to actively look for opportunities even in the face of unimaginable challenges yielded rich dividends as was evident in the phenomenal rise in the JSPL’s Year on Year financial report in 1QFY21. This coincided with a period when the domestic peers reported a sharp drop in volumes. As expected, the JSPL’s growth also significantly helped the Indian economy by earning the much-needed forex.

With India gradually easing restrictions in phases, the recovery has been heartening. The JSPL has benefited from the sharp economic revival with the company posting 16% Year on Year growth in standalone steel production and 50% Year on Year EBITDA growth in 1HFY21.

Chart showing unmatched growth of JSPL :

JSPL stock price has also mirrored the economic ups and downs during the year with its shares rising by 4.3x after hitting 52 weeks low in early April.

Amit Dixit, Vice President Institutional Equities at Edelweiss Securities, said, “JSPL’s unflinching focus to grow volumes by sweating assets coupled with an unwavering commitment to strengthening the balance sheet has helped the company emerge as the largest wealth creator (from the Apr’20 bottom) in the global steel sector in 2020. With more legs to the economic recovery, we firmly believe JSPL’s outlook to be even brighter.”

Only a few days ago, the JSPL had become India’s first private company to get the ‘Regular Supplier’ status from Indian Railways to supply 60kg 880 grade (90UTS) rails. This was followed by another good news for the company as Jindal Power Limited (JPL) a subsidiary of Jindal Steel & Power Limited (JSPL) was declared the successful bidder for Gare Palma IV/1 coal mine by the Ministry of Coal.

 

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