Jindal Steel result analysis

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Jindal Steel and Power came out with its unaudited financial results for the year and the quarter ended March 31, 2011.

Net profit after tax (consolidated) for the fiscal increased by 5 per cent to Rs 3,804.01 crore versus Rs 3,634.54 crore in 2010. For the fourth quarter, the bank"s net profit rose 4 per cent to Rs 1,001.70 crore as against 968.38 crore for the quarter in the year-ago period.

The company"s turnover for the fiscal increased by 18 per cent to Rs 13,111.60 crore as against a turnover of Rs 11,091.54 crore for the prior year. For the quarter, turnover surged by 21 per cent to Rs 3,854.54 crore as against Rs 3,175.79 crore in the comparable period last year.

The growth in the company"s turnover was mainly due to the sales of steel products and pellets.

The firm"s operating profit margin declined by 100 basis points to 45 per cent, while the net profit margin declined by 400 basis points year-on-year due to higher interest costs.

An analysis of the company"s financials revealed that for the quarter the company's sales of sponge iron and pig iron saw a decrease of 92 per cent and 61per cent respectively. The dip in sales of sponge and pig iron was attributed to higher captive consumption. However the Pellet"s sales to some extent acted as an offset as it surged by 1,792 per cent for the quarter over the year ago period.

In addition for the quarter company"s saw excellent steel production figures, they too were primarily attributed to steel pellet production which grew by 317 per cent over the year ago period. Whereas Sponge iron and Pig iron saw a dip of 4 percent and 0 percent respectively in production for the quarter.

All in all, it is more productive for the company to use its pig iron and sponge iron for internal consumption rather than sell it in the market.

Read more about: jindal steel and power, results
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