Jai Balaji Industries: Leading the way through growth and sustainability

Steel is the sinew of the country. From towering skyscrapers to sturdy bridges to the complex machines that power industry, steel is the foundation of our progress. Jai Balaji Industries, a fully integrated steel company, is pushing the boundaries to innovate to create lighter, stronger, more sustainable steel and a future as resilient as the metal itself.

Jai Balaji Industries has seen tremendous growth in the last one year, resulting in the company’s stock price rising from Rs 53 on April 25, 2023 to the current price of Rs 1089. It recorded an incredible return of 1953.44%.

Over the past decade, the company has faced many challenges, such as the ban on iron ore mining in Goa and Karnataka. Due to the cancellation of coal mines, the construction of a 5 million T steel plant in Purulia, West Bengal was forced to close, but it ended up being a futile effort.

The company has also raised its borrowing costs and trapped itself in a debt trap followed by the global economic crisis, weak economic conditions and COVID-19 lockdowns.

It was the promoters who took the right steps to right the wrong and recover. They have improved operational efficiency by focusing on producing high value-added products. The balance sheet was strengthened by restructuring debt through an asset reconstruction company. They even pledged their own shares to raise funds from private entities.

Can Jai Balaji Industries grow in the future? Let’s look at the topic in more detail.

Industry Overview of Jai Balaji Industries

Steel, the very metal that defines the nation’s strength and resilience, pulses through the veins of India’s development. Today, India’s steel industry has emerged as a global powerhouse with an annual production capacity of over 150 million tons, solidifying its status as the world’s second-largest steel producer.

India’s steel production is expected to increase by 4-7% to 123-127 MT in FY24. India has become a competitive global player due to its low labor costs and huge iron ore reserves. This provides many opportunities for global companies to come and invest in the Indian market.

Jai Balaji Industries Company Overview

Jaibalaji Industries Established in 1999, the company is a prominent player in the Indian steel sector, especially in the eastern part of the country. The company started as a sponge iron manufacturer and its original name was Jai Balaji Sponge Limited. The company is headquartered in Kolkata, West Bengal. They operate under the umbrella of Jai Balaji Group.

Jai Balaji Industries focuses on manufacturing and supplying a wide range of steel products. They have their own manufacturing facilities located in West Bengal, Chhattisgarh, Orissa and Jharkhand. JBIL exports its products to more than 40 countries. JBIL was listed on the stock exchange in December 2003.

The company’s production capacity is 3,45,000 T of sponge iron, 5,09,250 T of pig iron, 3,94,000 T of steel billet, 2,60,000 T of TMT bar, 2,40,000 T of nodular graphite pipe and 1,30,000 T of iron alloy. Striving to become an efficient producer of steel products, the company is focused on increasing operating rates across all units, improving operational efficiency and reducing costs.

Overview of products and segments of Jai Balaji Industries

sponge iron and pig iron

Raw materials used in steel production. The company’s Sponge Iron production was 2,52,290 MT in 2022-23 as compared to 2,14,563 MT in 2021-22. JBIL’s pig iron production was 4,80,856 MT and 4,38,461 MT during 2022-23 and 2021-22.

ductile iron pipe

Used for water and wastewater transportation. The production in 2023 and 2022 was 2,12,636 MT and 1,53,839 MT.

iron alloy

An alloy added to steel to enhance certain properties. The production of ferroalloys was 1,03,286 MT in 2023 compared to 1,05,698 MT in 2022.

steel billet

Semi-finished steel used for further processing. Steel billet production was 1,76,038 MT and 1,01,778 MT during 2023 and 2022.

Steel TMT Bar

Used in concrete reinforcement construction. The company produced 2,14,955 MT in 2023 compared to 1,57,132 MT in 2022.

finance Jaibalaji Industries

In fiscal year 2023, the company’s revenue increased by 30.54% from 4,692 in fiscal year 2022 to 6,125 in fiscal year 2023. During FY 2023, the company’s net profit also increased by 20.83% from 48 in FY 2022 to 58 in FY 23. This increase has occurred. This is because the ductile iron pipe sector recorded its highest sales in nine months.

As a result of analysis over three years from fiscal year 2021 to fiscal year 2023, the company Compound Annual Growth Rate(CAGR) sales 28%.

In FY 23, JBIL maintained favorable financial metrics with return on equity (ROE) of 10.39% and return on equity (ROCE) of 18%. During Fiscal Years 21 and 20, the Company was unable to generate revenue due to stringent lockdowns, under-utilization of workforce, supply chain and logistics issues, and health issues impacting the Company’s business operations.

Jai Balaji Industries’ Future Plans

Jai Balaji Industries expects the industry to grow at a CAGR of 13% – 15% in the near future. Currently, ductile iron pipes contribute around 30% to the revenue and with increasing demand due to infrastructure development schemes such as Jal Jeevan Mission and Mission AMRUT, the company expects the revenue contribution of di pipes to increase by 45% to 50%. there is.

Currently, the company has a 10% market share in the DI pipe segment in India and is expected to increase its share to around 18-20% in the future. The company also expects ferroalloy revenues to increase 25 to 35 percent, compared to the current 20 percent.

In addition, we are planning to expand production capacity along with realizing a low cost structure. DI pipe production capacity is planned to increase by 175% to 6.6 million tons per year, and ferroalloy production capacity is planned to increase by 46% to 1.9 million tons per year.

Currently, the company exports 2% of its DI pipe production and expects to achieve around 10% in the next two years. JBIL mainly targets countries close to India, such as Middle Eastern countries. Second, we are targeting African countries with poor infrastructure, followed by European markets.

JBIL is exporting ferroalloys from Japan to the United States and is expected to sign long-term contracts with them. JBIL also plans to become a net debt-free company in the next 15 months. The company has made significant progress in its net debt reduction strategy. The company reduced its overall debt by 54% from $871 million in FY 22 to $39.8 billion in FY 23.

The company also projects EBITDA in the range of 18% to 20%, which could increase on a QoQ basis. The company believes this range can be achieved by FY 26.

conclusion

Jai Balaji Industries has emerged as a notable force in the Indian steel sector. Their impressive 1900% stock price surge is testament to their solid performance and investor confidence. With a diverse product portfolio, strategic geographical presence and focus on self-reliance through captive power generation, they are well-equipped to capitalize on India’s burgeoning infrastructure development.

If Jai Balaji Industries can adopt and innovate, it has the potential to become a true leader in shaping the narrative of the Indian steel industry in the coming years. What do you think about the future growth of Jai Balaji Industries? Will you make an effort to move forward? Please share your thoughts in the comments below.

Written by Pavunkumar VM

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