 "jsw steel")
For the April-June quarter of the financial year 2025-26 (Q1FY26), JSW Steel reported consolidated revenue of ₹43,200 crore flat year-on-year (Y-o-Y) and down 4 per cent quarter-on-quarter (Q-o-Q)), with good net sales realisations (NSR) offset by weak Q-o-Q volume growth.
Steel volumes stood at 6.69 million tonnes (mt) (up 9 per cent Y-o-Y and down 11 per cent Q-o-Q), due to planned shutdowns, while average sale price (ASP) was ₹64,500 per tonnes (down 8 per cent Y-o-Y and up 8 per cent Q-o-Q), indicating recent price recovery.
Earnings before interest, taxes, depreciation, and amortisation (Ebitda) was at ₹7,580 crore, an increase of 38 per cent Y-o-Y and up 19 per cent Q-o-Q. Ebitda per tonne was ₹11,324 in Q1FY26, up 26 per cent Y-o-Y and 33 per cent Q-o-Q, due to better NSR and lower coal costs. Adjusted profit after tax (PAT) at ₹2,180 crore was up 159 per cent Y-o-Y and up 43 per cent Q-o-Q.
Consolidated crude steel production was 7.26 mt, up 14 per cent Y-o-Y and down 5 per cent Q-o-Q. Domestic capacity utilisation was 87 per cent vs 93 per cent in Q4FY25. Domestic sales was 5.96 mt, marking a 12 per cent Y-o-Y increase, while exports fell 20 per cent Y-o-Y.
In Q1FY26, blended steel prices increased ₹3,300 per tonne on a Q-o-Q basis, in line with guidance. Steel prices softened in June and the trend continued in July, due to weak global macros, cheaper imports and seasonal factors. Blended coking coal costs were $160 per tonne in Q1FY26 and likely to stabilise at these levels. Management foresees marginal coking cost reduction of $5 per tonne in Q2FY26.
Volumes will improve in Q2FY26 as shutdowns conclude. Management expects better margins due to subdued coking coal cost, improved efficiencies at JSW Vijayanagar Metallics or JVML (potential cost savings of ₹1,500 per tonne on a Q-o-Q) and reduced iron ore costs due to captive sourcing.
The BPSL phase II expansion (3.5 mt to 5 mt per annum) was completed and ramped up to 4.5mtpa in Q3FY25. Further 0.5 mtpa expansion remains under review pending Supreme Court decision, with potential delay, but no impact on the 2030 capacity target.
JSW Steel is investing ₹60,000 crore over three years to enhance capacities, operational efficiency, and raw material resources. By September ’27, expansion will increase domestic crude capacity to 41.9 mtpa from the current 34 mtpa. A 7 mtpa expansion is underway (2 mtpa Vijayanagar + 5 mpta Dolvi) targeted for September ’27.
Several debottlenecking projects will increase the capacity to 42 mtpa by September ’27. Phase-II expansion (awaiting board approval) could increase total domestic capacity to 50 mtpa by FY31. The new capacity will support 10 per cent volume CAGR over FY26-FY27.
JSW Steel currently meets 37 per cent of its iron ore needs via captive mines, and aims to increase this to 50 per cent by FY26-end. On the coking coal front, JSW has secured domestic coal mines and overseas assets (like Illawarra, Australia and Minas de Revuboè, Mozambique). The company is also building slurry pipelines, captive ports, and rail enhancements to cut freighting costs. It is commissioning renewable power capacity, with 996 MW commissioned in Phase I and another 1,470 MW planned by FY27, to lower costs and reduce carbon footprint.
JSW Steel is expanding its high-margin value-added special product (VASP) segment, which comprised 62 per cent of sales (excluding JVML) in FY25. JSW Steel’s downstream capacity is 13.5 mtpa, supplying to auto, infra, and renewable energy sectors. The company aims to maintain over 50 per cent share of VASP in the mix, and penetrate new segments like defence and railways.
Revenue growth could come from volumes along with some price recovery. As input costs are soft, Ebitda margin may rise to 18-19 per cent if safeguard duty is in force. Good operating cash flows are crucial to fund expansions without taking on debt. The net debt-to-Ebitda ratio was at 3.3x (FY25-end) and targeted deleveraging could reduce it to 1.7x by FY26-end.
The stock traded flat at ₹1,034 on Monday on the BSE, but analysts’ opinion was divided with some “reduce” and “sell” recommendations. According to Bloomberg, 11 of the 25 analysts polled post Q1 are bullish, while another nine are bearish and, five are neutral on the stock. Their average one-year target price is ₹1,042.
