JSW Steel starts FY26 on a high but remains cautious
The steelmaker's first-quarter profit jumped to ₹ 2,209 crore from Rs.867 in the same quarter a year ago, according to the company's exchange filings. A key reason for this was improved steel prices, primarily due to the government's 12% safeguard duty to protect the industry from cheap steel imports from China.
'Steel prices rose during the quarter, while sales volumes also picked up due to the ramp-up of the Vijayanagar expansion project,' said Suman Kumar, analyst at Dolat Capital.
The rise in steel prices, however, is a temporary phenomenon and the management believes the government needs to do more to ensure greater profitability for Indian steelmakers, he added.
JSW Steel, India's largest steelmaker by capacity, reported consolidated revenue of ₹ 43,147 crore for the April-June quarter, up from ₹ 42,943 a year earlier, beating the ₹ 42,790 crore projection, on average, of 23 analysts polled by Bloomberg.
JSW Steel benefited from lower cost of raw materials, mainly coking coal, which was partly offset by higher fuel consumption due to planned blast furnace shutdowns. Mining royalties also fell, helping reduce total expenses.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) in the first quarter rose 37% year-on-year to ₹ 7,576 crore.
The steelmaker maintained its production and sales guidance for 2025-26 at 30.5 million tonnes and 29.2 million tonnes, respectively.
JSW Steel spent ₹ 3,400 crore in the June quarter out of its estimated capital expenditure of ₹ 20,000 crore for FY26. For FY25, JSW Steel had initially estimated a capex of ₹ 20,000 crore before lowering it to ₹ 16,000 crore. It missed that revised target, spending only ₹ 14,656 crore in FY25.
The steelmaker reported consolidated production of 7.26 million tonnes for the June quarter, a 14% rise from a year ago. Sales volume improved 9% to 6.69 million tonnes.
In an post-earnings interaction with analysts, JSW Steel's management said the company's sales volume would increase in the second quarter as the maintenance shutdowns were completed. Also, a second converter at JSW Vijayanagar Metallics Ltd is being commissioned, which will help lower the cost of production, they said.
However, demand could weaken in the ongoing second quarter due to the monsoon rains.
'In Q2, the management expects to see some seasonal weakness in volumes due to the monsoon. While steel prices have come down, the company expects a further drop in coking coal prices, which will partially offset the price decline. The long-term outlook remains optimistic,' said Kumar.
JSW Steel's management also said that it expects a favourable decision when the government reviews the safeguard duty on steel imports. The government imposed the 12% safeguard duty on 21 April for a period of 200 days.
Although finished steel imports have moderated, exports also fell, and India continues to be a net importer.
JSW Steel's management expects low priced imports to remain a concern, stressed by changes in globaltrade flows due to rising tariff uncertainties.
The management also noted that while there has been some reduction in steel production in China in recent months, elevated exports of Chinese steel remain a challenge for India's steel industry.
JSW Steel also said, based on legal opinion, that it had gained control over Bhushan Power and Steel Ltd as on 30 June and was continuing with the consolidation of BPSL's financial results with its results.
The steelmaker expects to be compensated adequately if BPSL goes into liquidation after the SupremeCourt scrapped its resolution plan for the bankrupt company, as Mint reported on 23 May. JSW Steel has filed a review petition on the apex court's decision.
JSW Steel shares closed Friday's trading on BSE mostly unchanged at ₹ 1,034.40 each. The stock has gained 14.24% so far this year, while the benchmark Sensex index has risen 4.14%.

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