By Manvi Pant
BENGALURU (Reuters) -India’s JSW Steel forecast positive momentum in infrastructure demand in the coming quarters on Friday after reporting a first-quarter profit that fell more than expected due to stagnant demand and as higher costs weighed.
“Government spending is anticipated to rebound in the coming quarters and the outlook for private capex appears robust,” the company said.
The country’s largest steelmaker by market cap reported a 64% decline in profit to 8.45 billion rupees ($101 million) for the quarter ended June 30. Analysts, on average, had expected its profit to decline 53%, as per LSEG data.
India witnessed the world’s largest elections, spread over seven phases in the April-June quarter, with nearly 1 billion people eligible to vote.
Analysts had expected lukewarm demand in sectors such as infrastructure and manufacturing during the quarter, which had recorded heightened demand in the previous few quarters.
Additionally, prices of some key raw materials, such as iron ore, rose, leading to a near 7% year-on-year jump in expenses.
The most-traded iron ore on China’s Dalian Commodity Exchange (DCE) averaged 848 yuan a metric ton during April-June this year, a 46% jump from the same period in 2023.
Sequentially, there was an uptick in steel prices and raw material costs fell, said Kunal Kothari, Research Analyst of Centrum Broking. “However, lower volumes due to a maintenance shutdown partially offset the QoQ rise.”
Adding to the worry were steel prices in the country, which remained under pressure as India net imported cheaper finished steel from top-producer China, a country that has been grappling with strained steel demand.
Revenue from operations rose around 2% to 429.43 billion rupees, beating analysts estimates of 415.75 billion rupees.
($1 = 83.6380 Indian rupees)
(Reporting by Manvi Pant in Bengaluru; Editing by Janane Venkatraman)
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