Summary
Jindal Steel Limited - Q3 FY26 Earnings Call Summary Saturday, January 31, 2026
Event Participants
Executives 7 Damodar Mittal, Gautam Malhotra, Pankaj Malhan, Sabyasachi Bandyopadhyay, Sunil Agrawal, Sushil Pradhan, Vishal Chandak
Analysts 10 Amit Murarka, Ashish Kejriwal, Jashandeep Singh Chadha, Kamlesh Bagmar, Pallav Aggarwal, Parthiv, Rahul Gupta, Raashi, Ritesh Shah, Sumangal Nevatia, Siddharth Gadekar, Tushar Chaudhari, Vikash Singh
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Sales Volume | 2.28 million tons | +22% QoQ, driven by ramp-up of BF2/BOF2 at Angul. |
| Crude Steel Production | 2.51 million tons | +25% QoQ, supported by new BF2 capacity at Angul. |
| Gross Revenue | ₹15,172 crores | +12% QoQ, volume growth offset by weaker steel prices. |
| Adjusted EBITDA | ₹1,593 crores | -38% QoQ (est), impacted by low prices and one-time costs. |
| EBITDA per Ton | ₹6,981 | -₹1,535 vs “underlying” level of ₹8,516 due to start-up costs. |
| Reported PAT | ₹189 crores | Significant sequential decline post start-up and interest costs. |
| Net Debt | ₹15,443 crores | +₹1,287 crores QoQ due to high CAPEX and lower EBITDA. |
| Net Debt/EBITDA | 1.72x | Up from previous quarters; management targeting sub-1.5x. |
Geographic & Segment Commentary
- Domestic Market: Management achieved record penetration in India despite muted demand (0.5% growth) to offset lower-margin exports. Domestic realizations remained superior to export realizations despite HRC price pressure.
- Export Market: Export share fell to 6% of sales; management strategically avoided low-realization exports. Future focus remains on the European market for plates and HRC, particularly under CBAM dynamics.
- Product Mix: Shifted to a 50:50 Flat-to-Long ratio from previously Long-dominated mix. HRC production focused on high-throughput thicker grades during the ramp-up phase, temporarily compressing ASP by ~₹1,000/ton.
Company-Specific & Strategic Commentary
- Capacity Expansion: Commissioned BF2 and BOF2 at Angul; BOF3 (3 MTPA) on track for Q4FY26 to reach 15.6 MTPA total capacity.
- Power Integration: Synchronized two 525 MW modules (1,050 MW total) of SBPP power plant; units currently under stabilization for captive use.
- Vertical Integration: Utkal B1 coal mine opened; Slurry pipeline is 94% complete and on track for year-end commissioning to save ₹750-₹850/ton.
- Digitalization: Executing multi-year AI transformation focused on real-time logistics, dispatch, and CXO decision support.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Sales Volume | 8.5 - 9.0 million tons (FY26) | Management remains on track despite Q3 headwinds. |
| Net Debt/EBITDA | Sub-1.5x (Cycle Target) | Higher cash flows from ramped-up assets expected to deleverage. |
| Production Mix | 55% Flats / 45% Longs (Q4 FY26) | Expecting a shift toward flats as HSM utilization increases. |
| Cost Outlook | +$18-$20/ton Coking Coal (Q4 FY26) | Reflects rising global coking coal consumption costs. |
Risks & Constraints
| Risk | Context |
|---|---|
| Global Oversupply | Record Chinese exports (119MT in 2025) continue to put pressure on global HRC prices. |
| Input Cost Volatility | Coking coal consumption costs expected to rise $18-$20/ton in Q4, potentially offsetting steel price gains. |
| Project Execution | BOF3 and Slurry Pipeline are in final stages; any delays would defer margin expansion. |
Q&A Highlights
Realization & Product Mix
- Question: Why did realizations drop significantly more than market prices? (Vikash Singh)
- Answer: Drop was due to ramp-up skew toward HRC, higher throughput (thicker) grades with lower value-add, and increased internal/captive consumption of by-products which reduced external revenues (Gautam Malhotra).
One-time Costs
- Question: What comprises the ₹350 crore start-up cost? (Ashish Kejriwal)
- Answer: Primarily higher coke rates during BF2 startup and the use of expensive bought-out coke while internal batteries were still stabilizing (Gautam Malhotra).
Project Timelines & Evacuation
- Question: How will BOF3 be utilized without immediate metallic capacity? (Sumangal Nevatia)
- Answer: Management expects 60%-66% utilization in FY27 before the next DRI/BF units come online at the end of FY27 (Gautam Malhotra).
- Question: Is evacuation infrastructure ready for expanded capacity? (Ritesh Shah)
- Answer: Current rail and road infrastructure at Angul is fully capable of handling incremental volumes without new bottlenecks (Gautam Malhotra).
Future Margins
- Question: Will increased flat product volumes lead to lower margins compared to historical levels? (Kamlesh Bagmar)
- Answer: While volumes shift the mix, new heat treatment furnaces and internal cost savings from the slurry pipeline and captive coal will protect profitability (Gautam Malhotra).
Key Takeaway
Jindal Steel Limited reported a challenging quarter characterized by a sharp sequential drop in EBITDA per ton to ₹6,981 (or ₹8,516 adjusted), primarily due to ₹350 crores in one-time blast furnace start-up costs and a product mix skewed toward lower-margin HRC during the ramp-up phase. Despite these headwinds, the company achieved record sales volumes of 2.28 million tons and successfully operationalized 1,050 MW of captive power. Strategically, the firm is at an inflection point, with the Angul expansion nearing 15.6 MTPA and the slurry pipeline close to commissioning, which management expects will structurally lower costs by ₹750-₹850/ton. The outlook for Q4 FY26 is optimistic, supported by a ₹3,000-₹3,500/ton recovery in steel prices and normalized operational parameters at the new blast furnace. Management remains focused on deleveraging the balance sheet back to sub-1.5x Net Debt/EBITDA as these new assets drive scale and cash flow.
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