Jindal Saw expects lower margin this fiscal, Q1 net profit up
The company's profit margin for the next three quarters might fall due to pressure in all segments, increased competition, and lower capacity utilisation.
Steel pipemaker Jindal Saw Ltd will see increased competition and slower order flow, compressing its margin for the rest of this fiscal, a top official said on Monday.
The margin for the next three quarters will be about Rs11,000 a tonne from the current Rs12,000 a tonne, managing director Indresh Batra told analysts on a conference call.
"Market is under pressure in all segments because of increase in competition and lower capacity utilisation," Vinay Gupta, vice-president (finance), said, adding that there was pressure on new orders, mainly from the oil and gas segments in India and overseas.
Despite a difficult environment, the company expects to meet the earlier announced guidance of 900,000-1 million tonnes of output in financial year 2010-11, Gupta said.
Jindal Saw's current order book stands at $700 million, which will be executable by March 2011, Gupta said, adding that 55% of the orders were for export.
The company plans to spend about Rs400 crore in the next 12-15 months to set up plants in India and Abu Dhabi, the plans for which were announced earlier.
Earlier in the day, Jindal Saw reported an 11% increase in net profit to Rs149 crore for the quarter ended June. Revenue for the period fell 24% to Rs1,135 crore on lower raw material prices, Gupta said.
Shares in Jindal Saw, which the market values at about Rs5,500 crore, closed down 0.12% at Rs202.25 in a flat Mumbai market.