JSW Group's Steel Business Subsidiary Approves Rs 1,676.45 Crore Buyback; The Company to Transfer Its Salav Unit for Rs 2,233 Crore
With a PE ratio of 74.2, the company trades at a premium compared to the industry PE of 17. The company has ROCE of 13.3 per cent and ROE of 11.8 per cent.
JSW Steel Limited has announced that its subsidiary, Piombino Steel Limited (PSL), has approved a buyback of 22,26,36,000 equity shares, each with a face value of Rs 10, at a buyback price of Rs 75.30 per share. The total value of the buyback is Rs 1,676.45 crore. The buyback is subject to shareholder approval at PSL. At its Board Meeting on March 25, 2025, JSW Steel's Board also approved tendering 22,26,36,000 shares it holds in PSL under this buyback. The company currently owns 508 crore equity shares in PSL, representing 83.28 per cent of PSL’s total equity shareholding. This move is expected to strengthen JSW Steel’s balance sheet while optimizing its capital structure. The approval and execution of the buyback will be contingent upon PSL's acceptance and shareholder approval.
JSW Steel Limited has also announced the transfer of its Salav unit, located in Salav Village, Raigad District, Maharashtra, to its wholly owned subsidiary, JSW Green Steel Limited, for a total consideration of Rs 2,233 crore. The transfer is being executed on a Slump Sale basis, and the transaction is expected to be completed by March 31, 2025. The Salav unit has a Direct Reduced Iron (DRI) production capacity of 0.9 million tonnes per annum (MTPA). This transfer aligns with JSW Steel’s long-term strategy to reduce carbon footprints by developing a 4 MTPA integrated Green Steel plant at the Salav site in phases.
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The consideration for this transaction will be settled through a combination of cash, issuance of equity shares, or convertible equity instruments by JSW Green Steel Limited to JSW Steel Limited. The Business Transfer Agreement is scheduled to be executed on March 26, 2025. The decision to carve out the Salav unit into JSW Green Steel Limited is part of the company’s efforts to align with global initiatives such as the Carbon Border Adjustment Mechanism (CBAM) of the European Union and India’s target of net-zero carbon emissions by 2070. Government projects are also expected to mandate the use of low-carbon steel in the near future.
JSW Steel is primarily engaged in the business of manufacture and sale of Iron and Steel Products. It is the flagship business of the diversified, US$ 23 billion JSW Group.The Group has interests in energy, infrastructure, cement, paints, sports, and venture capital.
In the Quarterly Results of December 2024, the company reported a revenue of Rs 41,378 crore, reflecting a YoY decline of 1.34 per cent compared to Rs 41,940 crore in December 2023. The operating profit stood at Rs 5,579 crore, marking a 22.12 per cent decrease from Rs 7,164 crore in the same quarter last year. The profit after tax (PAT) declined by 70.31 per cent to Rs 717 crore from Rs 2,415 crore in December 2023.
In FY24, the company posted a revenue of Rs 1,75,006 crore, registering a 5.45 per cent growth compared to Rs 1,65,960 crore in FY23. The net profit for the year stood at Rs 8,812 crore, up 112.64 per cent from Rs 4,144 crore in the previous financial year.
With a PE ratio of 74.2, the company trades at a premium compared to the industry PE of 17. The company has ROCE of 13.3 per cent and ROE of 11.8 per cent.
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Disclaimer: The article is for informational purposes only and not investment advice.