Steel is the sinew of a nation. From towering skyscrapers to sturdy bridges and the intricate machinery that powers industries, steel is woven into the fabric of our progress. Jai Balaji industries, a fully integrated steel company is pushing their boundaries for innovation, crafting lighter, stronger and even more sustainable steel, shaping a future as resilient as the metal itself.

Jai Balaji industries saw tremendous growth in the past year and as a result of it the company’s share price rose from 53 rupees in 25th April 2023 to 1089 rupees today. It gave a mammoth return of 1953.44%.

For the last 10 years, the company faced a lot of challenges like the mining ban of iron ore in Goa and Karnataka. Cancellation of coal blocks which led to forced closure of setting up 5Mn T Steel Plant Project in Purulia, West Bengal which ended up in vain. 

The company also trapped itself by raising borrowing costs and debt traps followed by global economic crisis, weak economic conditions and covid lockdowns.

It was the promoters who took the right steps to bounce back and correct the things that went wrong. They improved their operational efficiency by focusing on production of Value-Added Products. They strengthened the balance sheet by restructuring the debt through Asset Reconstruction Companies. Even they pledged their shares to arrange for funds from private parties.

Will Jai Balaji Industries grow in future? Let’s delve into the topic further.

Industry overview Of Jai Balaji industries

Steel, the very metal that defines the strength and resilience of a nation, pulsates through the veins of India’s development. Today, the Indian steel industry stands tall as a global powerhouse, its production capacity exceeding 150 million tones annually, firmly securing its position as the world’s second largest producer of steel.

India’s steel production is expected to increase by 4-7% to 123-127 MT in FY24. India’s low labor costs and huge iron ore reserves make it a competitive global player. This poses a lot of opportunity to the global players to come and invest in the Indian market. 

Company overview Of Jai Balaji industries

Jai Balaji Industries was established in 1999, it acts as a prominent player in India’s steel sector, particularly in Eastern India.The company started as a sponge iron manufacturer and it was originally named as Jai Balaji Sponge Limited. The company has its headquarters in Kolkata, West Bengal. They operate under the umbrella of Jai Balaji Group. 

Jai Balaji industries focuses on manufacturing and supplying a diverse range of steel products. They have their own manufacturing units which are located in West Bengal, Chhattisgarh, Orissa and Jharkhand. JBIL exports its products to more than 40 countries.  JBIL got listed in stock exchanges in December 2003.

The company has a capacity to manufacture 3,45,000 T of sponge iron, 5,09,250 T of pig iron, 3,94,000 T of steel  billets, 2,60,000 T of TMT bars, 2,40,000 T of ductile iron pipes and 1,30,000 T of ferro alloys. The company with its commitment to emerge as an efficient producer of iron and steel products, is focused on increasing capacity utilization of all units, improving operational efficiency and reducing cost.

Product and segment overview Of Jai Balaji industries

Sponge iron and Pig iron

Raw material used for steel production. Company’s production of Sponge Iron was 2,52,290 MT during the year 2022-23 as compared to 2,14,563 MT during the year 2021-22. Production of pig iron of JBIL was 4,80,856 MT and 4,38,461 MT during the year 2022-23 and 2021-22

Ductile iron pipes

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

Ferro Alloys

Alloys added to steel to enhance specific properties. Production of Ferro Alloys was 1,03,286 MT during the year 2023 as compared to 1,05,698 MT during the year 2022.

Steel billets

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

Steel TMT bars

Used in construction for concrete reinforcement. The company manufactures 2,14,955 MT during the year 2023 as compared to 1,57,132 MT during the year 2022

Financials Of Jai Balaji industries

In FY 2023 revenue of the firm increased by 30.54% from 4,692 in FY 2022 to 6,125 in FY 2023. During FY 2023 the net profit of the firm also increased by 20.83% from 48 in FY 2022 to 58 in FY 23. This increase happened because of the highest ever 9 months sales in ductile iron pipes.

Analyzing a span of three years, encompassing FY 2021 to FY 2023, the company displayed a Compounded annual growth rate(CAGR) of 28% in revenue.

In FY 23, JBIL maintained favorable financial metrics with a Return on Equity (ROE) of 10.39% and a Return on Capital Employed (ROCE) of 18%.  During FY 21 and FY 20 the company was not able to make profits because tight lockdown, underutilization of manpower, supply chain and logistics issues and health concerns which impacted the companies business operations. 

Future Plans Of Jai Balaji industries

Jai Balaji industries expects the industry to grow by 13% – 15% CAGR in the near future. Currently the ductile iron pipes contribute around 30% of their revenue and with increased demand due to infrastructure development initiatives like Jal Jeevan Mission and mission AMRUT, the company expects the revenue contribution of di pipes to increase by 45% – 50%.

Currently the company has 10% market share in the DI pipe segment in India and it is expecting to increase its share to around 18% – 20%. The company also expects the ferroalloys revenue to be increased by25% -35% which is currently contributing 20%.

The company is also planning to expand its capacity along with achieving low cost structure and it also plans to expand its capacity of DI pipes by 175% to 6.6 lakh tons per annum and ferroalloys by 46% to 1.9 lakh tons per annum.

Currently the company is exporting 2% of its DI pipe production and it is expecting to achieve the same around 10% in the next 2 years. JBIL is primarily targeting countries which are nearer to India like the middle east countries. Secondly they are targeting African countries which have a shortage of infrastructure and followed by European markets.

JBIL is exporting ferroalloys to countries from Japan to America and it is expected to have long term contracts with them. JBIL has also planned 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 of 871 crores in FY 22 to 398 crores in FY 23, a reduction of 54%.  

The company is also planning to have an EBITDA in the range of 18% – 20% which can be increased on QoQ basis. The company believes this range can be achieved by FY 26.

Conclusion  

Jai Balaji Industries has emerged as a force to be reckoned with in the Indian steel sector. Their impressive 1900% share price surge is a testament to their robust 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 booming infrastructure development. 

If Jai Balaji Industries can adopt and innovate, they have the potential to become a true leader, shaping the narrative of India’s steel industry for years to come. What do you think about Jai Balaji Industries future growth? Will it strive to move forward? Do share your views in the comments below

Written by Pavunkumar V M

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