JSW Steel - Near-Term Bottom In Place; Set For An Upswing: Systematix

Systematix Research Report

We return positive post our recent visit to JSW Steel Ltd.’s 10 million tonnes per annum steelmaking facility, Dolvi Works, at Dolvi Maharashtra.

JSW Steel acquired the facility from erstwhile Ispat Industries in 2010, and scaled it up from 3.3 million tonne to 5 mt in FY17, and further to 10 mt in FY21 in two phases.

The recent 5 mt expansion cost JSW Steel Rs 200 billion, translating into a capex of $600/tonne versus $1,000/tonne needed to set up a greenfield project. This facility is spread over 1,600 acres, which includes 200 acres for jetty operations; it is one of India’s most efficient plants in terms of land utilisation.

Management intends to enhance capacity to 15 mt in the long term for which it is scouting for land in the vicinity and evaluating several steelmaking technologies.

JSW Steel has not only doubled its growth rate versus the industry, but also expanded brownfield capacity at low-cost capex, showing strong and efficient management capabilities.

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