Tata Steel vs JSW Steel India has the potential to produce 143.9 million tonnes of steel annually (MT), making it the second-largest producer of steel. With a per capita use of 72.3 kg, it ranks third among all consumers of steel. Steel is a strategically significant industry for India, employing about half a million people and adding nearly 2% to the nation’s GDP.
In order to stimulate this sector, the government plans to raise capacity to 300 MT and per capita consumption to 160 kg by 2030. The expansion of this industry will benefit two well-known private businesses in addition to the several steel corporations who stand to gain from this initiative. JSW Steel and Tata Steel are those. The financials, foundations, and values of the two companies are compared in this article.
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Business Overview
Tata Steel
Represents the steel division of the esteemed Tata Group. Its main activities include mining, producing steel, selling finished steel, and providing value-added goods and services.
Its product line serves the needs of the general engineering, industrial, automotive, and construction industries.
The firm produces steel in more than 50 nations, making it the most geographically diversified producer in the world.
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JSW Steel
Nevertheless, is a company that manufactures and sells iron and steel products. It is a member of the JSW Group.
The company offers a wide range of products that are utilised in the project and construction, general engineering, and automotive industries.
Hot rolled
Cold rolled
Coated coil
Tubes
Rebar
Wire rods
Hot rolled
Cold rolled
Colour coated products
Galvanised
Galvalume
TMT rods
Wire rods
Special alloy steel
Avante steel doors
Key Segments
Agriculture
Automotive
Contruction
Consumer goods
Energy and Power
Engineering
Material Handling
Automotive
General Engineering
Machinery
Projects and construction
Competitive Advantage
Captive iron ore and coking coal mines
Low cost of manufacturing
Diversified global presence
Expanding to adjacent businesses beyond steel
Largest steel exporter in India
Captive iron ore
High share of value added products in revenue
Geographical advantage
Low cost capex execution
Key Risks
Raw material pricing risks
Cyclicality of steel industry
Raw material pricing risks
Cyclicality of steel industry
Revenue growth
Tata Steel’s revenue has increased at a CAGR of 17.2% over the last five years compared to JSW Steel’s 23.5%, despite the fact that Tata Steel’s total revenue is almost twice that of JSW Steel.
The increase in domestic economic activity, capacity addition, and steel prices drove JSW Steel’s revenue growth.Tata
Steel’s revenue growth has been driven by a rise in sales volume, a greater share of value-added products, and rising realisations.
The steel sector had a notable year in 2022. The sector as a whole recorded its best financial results. This was all made possible by the steel cycle’s upturn, which enabled steel companies to expand their operations.
Both businesses anticipate that going forward, government initiatives to support infrastructure, housing, and the automotive industry will fuel a strong growth in their sales.
Volume growth
Over the past five years, Tata Steel has experienced a compound annual growth rate (CAGR) of 5.3% in both India and Europe. Conversely, JSW Steel’s volumes increased at a 4.3% (CAGR) over the same time, mostly due to a double-digit increase in the year that ends in 2022.
The robust post-covid recovery in demand drove the dramatic increase in volume.
It is anticipated that going forward, the quantities will increase in tandem with the nation’s economic growth.
Operating expenses per tonne
The whole operational cost incurred by the business to produce one tonne of steel is known as operating expenditures per tonne. It is better to have a lower number.
Over the past five years, Tata Steel’s cost per tonne has increased at a CAGR of 8.5% whereas JSW Steel’s has increased at a CAGR of 17%.
Because to rising import costs for coking coal, the company’s primary source of raw materials, JSW Steel had to pay more per tonne in 2021–2022. Since the majority of the necessary raw materials are sourced from Tata Steel’s in-house mines in India, the company did not suffer as much.
With the exception of this year, JSW Steel’s cost per tonne has been lower than Tata Steel’s, suggesting that the latter has a cost advantage. The main cause of increased expenses in.
EBITDA Per Tonne
The company’s earnings per tonne, or earnings before interest, tax, depreciation, and amortisation, is a measure of how much money it makes for each tonne of finished steel it produces.Even though JSW Steel’s EBITDA/tonne has
increased at a CAGR of 21.9% over the past five years compared to Tata Steel’s CAGR of 33.6%, JSW Steel still has a higher EBITDA/tonne.
Over the past five years, JSW Steel has experienced increased EBITDA per tonne because to decreased costs and better realisations. Nonetheless, Tata Steel’s overseas divisions have increased their profitability this year, which has raised the company’s consolidated EBIDTA per tonne.
Profitability
Operating profit margin and net profit margin are two metrics that are used to assess a company’s profitability.
The percentage of revenue that remains after operating expenditures are subtracted is shown by the operating profit margin.
Selling finished steel and other goods with added value is one of the operating operations in the steel industry.
On the other hand, the net profit margin indicates the portion of revenue that remains after all operating and non-operating costs have been subtracted.
Tata Steel’s five-year average operating profit margin was 18.7%, whereas JSW Steel’s was 21.8%.
Manufacturing facilities
Tata Steel operates five manufacturing plants in India and overseas with a combined manufacturing capacity of 34 million metric tonnes per year (MT).
With both brownfield and greenfield developments, it intends to treble its capacity to 40 MT by 2030 from its current 20.6 MT. The company’s plant in the UK can produce 5.1 MT, while its plant in Europe can produce 7.3 MT.
On the other hand, JSW Steel operates fourteen manufacturing units and four downstream facilities with a combined capacity of 28.5 MT in India and the USA.
It is making significant investments to boost its capacity to 45 MT by 2030 and 37.5 MT by 2025. It has already invested Rs. 480 billion in this over the
Distribution network
Tata Steel has a network of 27 sales offices with 18 stockyards, 262 distributors, and 14,688 dealers for its business-to-customer (B2C) division to sell its products.
On the other hand, JSW Steel sells its products through a network of over 16,000 retail outlets covering over 600 districts in India. It also exports to over 100 countries across five continents.
Research and Development (R&D)
Innovation is an integral part of any company’s growth. Both the companies are investing heavily in R&D.
JSW Steel has a strategic collaboration with JFE Steel of Japan. It has access to state-of-the-art technologies that will help produce high-value special steel products.
It’s also digitally transforming every aspect of its business by adopting technologies such as artificial intelligence, big data, advanced robotics, and hybrid cloud.
Tata Steel is leveraging technology to develop new products improve operational efficiency and sustainability. In the financial year 2021, it developed 79 new products. It also has 109 patents under its name.
Which is a better company Tata Steel vs JSW Steel?
The overall rating of Tata Steel is 4.2, whereas JSW Steel is rated 4.0 out of 5.0. Tata Steel is rated higher than JSW Steel for job security, skill development, work-life balance, company culture, work satisfaction, salary & benefits and career growth
Who pays better Tata Steel vs JSW Steel?
The average salary of a Manager at Tata Steel is 13.0 lakhs per year compared to 14.0 lakhs per year at JSW Steel. For the Assistant Manager role, Tata Steel pays 9.0 lakhs per year, and JSW Steel pays 8.0 lakhs per year.
Which is better with regard to salary & benefits Tata Steel vs JSW Steel?
Tata Steel is rated better than JSW Steel when it comes to salary & benefits. Tata Steel is rated 3.7, whereas JSW Steel is rated 3.5 on employee salary & benefits parameters.
Which company provides a better work-life balance Tata Steel vs JSW Steel?
Tata Steel is rated 4.0/5.0 for work-life balance, while JSW Steel is rated 3.6/5.0. At Tata Steel, 41% of employees reported working from Monday to Friday, and 55% mentioned having flexible timings. For JSW Steel, 56% of employees reported working from Monday to Friday, and 44% mentioned having flexible timings.
Which company provides better growth opportunities Tata Steel vs JSW Steel?
Tata Steel is rated 3.4/5.0 in career growth by 6.0 k employees, while JSW Steel is rated 3.3/5.0 by 4.8 k employees in India.
