The largest steel producer will invest $2.5 billion in capacity expansion
JSW Steel Ltd., India's largest steel producer, has announced ambitious development plans. In the next fiscal year (fiscal 2027), the company's capital expenditures will range from 220 to 240 billion rupees (approximately $2.5 billion). This is almost 50% more than the investments of the previous year, which amounted to 155.85 billion rupees. This is reported by Bloomberg.
JSW Steel's investment activity is driven by the rapid development of Indian infrastructure. The Indian government is investing billions of dollars in the construction of highways, ports and airports, aiming to accelerate the country's economic growth and transform it into a developed economy by 2047.
The company's plans for capacity expansion:
- By 2030, JSW Steel plans to increase its total capacity to 48.8 million tons per year (from the current 31.9 million tons);
- The Board of Directors approved the expansion of the take-off and landing capacities of one of the subsidiaries by 5 million tons per year. The cost of this project is 260 billion rupees, and commissioning is scheduled for fiscal year 2030.
According to CEO Jayant Acharya, steel demand in India is expected to grow by 7-9% in the current fiscal year 2027. At the same time, domestic metal prices are likely to remain in a stable range after the sharp jumps in April and May.
The company considers geopolitical instability in the Middle East to be the main risks for further growth. This can lead to prolonged disruptions in supply chains, rising energy prices, and further inflationary pressures.
As reported by Reuters, for the quarter ended March 31, the company showed strong results.:
- JSW Steel's sales rose 6% during the quarter, boosted by a 10.4% increase in steel consumption in India.%;
- Revenue grew by 14.2% year-on-year, reaching 511.8 billion rupees ($5.34 billion), which exceeded analysts' forecasts.;
- Net profit jumped to 163.7 billion rupees. This significant figure is due to a one-time gain (about 179 billion rupees) from the sale of Bhushan Power and Steel's steel business.;
- Operating margin (EBITDA) improved from 14.23% to 16.87% due to higher sales, despite rising prices for coking coal.
The recovery in steel prices provided a positive dynamic, which was facilitated by the tariffs imposed by New Delhi on imports from China and the growth in export demand after the reduction of tariffs in the United States.