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JSW Steel likely to spend Rs10,000 crore for capex in FY22
Steel Insights Bureau
JSW is currently implementing its mega capex plan of Rs 48,700 crore spread over FY18-22.
Of this, Rs 23,900 crore has already been spent till FY20. During FY21, the management has guided a capex spend of Rs 9,000 crore (including Rs 800 crore towards mining capex). The balance unspent capex of Rs 16,600 crore would be spent over FY22-23
Analysts have factored in a capex of Rs 10,000 crore/Rs 9,000 crore in FY22 and FY23.
JSW Steel’s on ongoing capex program is set to expand its upstream and downstream steel capacities.
Cash flows out of expected robust EBITDA in FY22 and FY23 would take care of JSW’s high planned capex and would also aid deleveraging, Motilal Oswal said in a report.
Completion of Dolvi expansion would help JSW achieve 16 percent volume CAGR over FY22-23 while merger of Bhushan Power & Steel (BPSL), expected by FY24, would further add volumes of 3 mt (13 percent of FY22 capacity).
New downstream capacities to be commissioned over the next 12 months would increase market share of value added steel (color coated, galvanized etc.).
Dolvi expansion to drive growth
JSW’s 5 million tons per annum upstream expansion at Dolvi is nearing completion and is expected to be integrated and stabilized in Q1 of FY22.
JSW recently told investors that it has commenced first production from its new Hot Strip Mill facility at Dolvi.
The 5 mtpa Dolvi expansion will add 2.1 mt and 4 mt to JSW’s volumes in FY22 amd FY23, factoring in 50 percent and 80 percent capacity utilisation.
This should help JSW achieve above industry volume growth of 22 percent and 11 percent in FY22 and FY23, implying 16 percent CAGR, Motilal Oswal said.
Post Dolvi expansion, JSW’s steelmaking capacity would increase to 23 mtpa.
“With a normalisation in steel demand, we expect JSW’s utilisation of existing capacity to improve to 90 percent in FY22. This, coupled with additional volumes from Dolvi, would drive 22 percent and 11 percent volume growth in FY22 and FY23 to 18.1 mt and 20 mt, implying 16 percent CAGR over FY21-23.
