Summary
JSW Steel Limited - Q3 FY26 Earnings Call Summary Friday, January 23, 2026 5:00 PM
Event Participants
Executives 5 Arun Maheshwari (Director, Commercial & Marketing), Ashwin Bajaj (Group Head, Investor Relations), G.S. Rathore (Whole-time Director & COO), Jayant Acharya (Joint MD & CEO), Swayam Saurabh (CFO)
Analysts 8 Amit Murarka, Ashish Jain, Jashandeep Chadha, Kirtan Mehta, Parthiv Jhonsa, Rahul Gupta, Ritesh Shah, Satyadeep Jain, Sumangal Nevatia
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Crude Steel Production | 7.48 million tonnes | +6% YoY; consolidated production impacted by a planned shutdown of BF-3 at Vijayanagar. |
| Saleable Steel Sales | 7.64 million tonnes | +14% YoY; highest-ever quarterly sales driven by JVML ramp-up and 0.3 million tonnes inventory liquidation. |
| Revenue from Operations | ₹45,991 crores | Realizations impacted by multi-year low steel prices during the quarter, partially offset by better product mix. |
| Adjusted EBITDA | ₹6,620 crores | Consolidated margin at 14.4%; mitigated price drops through cost efficiencies and high value-added sales. |
| EBITDA per tonne | ₹8,700 | Adjusted consolidated value; Indian operations performed stronger at ~₹8,800 per tonne. |
| Net Profit (PAT) | ₹2,410 crores | Includes ₹1,439 crores deferred tax asset related to BPSL slump sale; impacted by ₹529 crores exceptional labor code item. |
| Net Debt | ₹80,347 crores | Net Debt/EBITDA at 2.91x and Net Debt/Equity at 0.92x; weighted average interest cost improved 60 bps YoY to 6.51%. |
| Value Added Product Mix | 61% | Highest ever VAP sales at 4.54 million tonnes; grew 16% YoY, driven by auto and renewable sectors. |
| Capital Expenditure | ₹3,500 crores | Total 9M FY26 spend reached ₹10,000 crores; full-year FY26 guidance maintained at ₹15,000–16,000 crores. |
Geographic & Segment Commentary
- India Operations: Achieved 7.28 million tonnes production (+7% YoY) with 93% capacity utilization excluding the BF-3 shutdown. Domestic sales grew 10% YoY, outperforming national consumption growth.
- USA Operations (Ohio & Texas): Reported EBITDA of $3.1 million, down due to planned caster upgrades and lower realizations for plates. 9M FY26 performance remains much stronger than previous year ($36M vs -$32M loss).
- JSW One (Digital): Platform GMV reached ₹4,544 crores (+36% YoY), with steel volumes growing 43% YoY. The platform’s credit offerings facilitated over ₹1,300 crores of the total GMV.
- Europe (Exports): Exports to Europe account for ~1.2-1.3 million tonnes annually; management noted exposure is decreasing as domestic demand and other Asian markets absorb volumes.
Company-Specific & Strategic Commentary
- BPSL Strategic JV: JFE Steel Japan to take 50% stake in BPSL at an EV of ₹53,000 crores. This will result in ₹32,000 crores cash inflow and ₹37,000 crores deleveraging for JSW Steel.
- Odisha Greenfield Project: Board approved a 5 million tonne plant at Jagatsinghpur via JSW Utkal Ltd with a ₹31,600 crore capex. The site is port-based and linked to a 30 million tonne slurry pipeline to optimize logistics.
- Raw Material Security: Commenced production at Cudnem mine (Goa); 13 of 23 mines now operational. Target is 50% iron ore and 25% coking coal self-sufficiency by FY31.
- Digital & AI: Deployed AI vision systems for real-time monitoring of sinter flames and equipment. These solutions are expected to deliver ₹100 crores per annum in cost savings and safety mitigations.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY26 Production/Sales | 30.5 MT / 29.2 MT | On track to achieve targets; already met 74% of consolidated guidance in 9M. |
| FY27 Demand Growth | 7% to 9% | Driven by infrastructure, commercial real estate, and the automotive sector. |
| India Capacity | 56 million tonnes by FY31 | Includes new Odisha plant and ongoing brownfield expansions at Dolvi and Vijayanagar. |
| Q4 FY26 Cost Outlook | +$15 to $20/tonne coal | Coking coal costs expected to rise, but will be offset by higher steel realizations (up ₹3,500/t since Dec). |
Risks & Constraints
| Risk | Context |
|---|---|
| Global Trade & Pricing | Elevated Chinese exports (133.5 MT in CY25) have kept Asian prices subdued. Management is relying on anti-dumping duties and Chinese production moderation for relief. |
| Regulatory (CBAM) | European Carbon Border Adjustment Mechanism (CBAM) poses a future cost risk. Management is undergoing emission verification but notes Europe as an export destination is shrinking in importance. |
| Raw Material Volatility | Coking coal remains a variable cost head. While JSW is acquiring mines in Australia and Mozambique, the current quarter faces a $15-$20 per tonne cost headwind. |
Q&A Highlights
Steel Pricing and Realizations
- Question: What is the extent of the recent price recovery? (Sumangal Nevatia)
- Answer: Prices recovered from multi-year lows in late December. Flat steel rose by ₹1,500/tonne in Dec and another ₹2,000/tonne in early Jan, with further room for improvement (Jayant Acharya).
BPSL Transaction Timeline
- Question: When will the BPSL deal close? (Sumangal Nevatia)
- Answer: CCI approval received; shareholder approval expected by early Feb. The slump sale should conclude by March 2026, bringing in ₹24,400 crores of cash (Swayam Saurabh).
Odisha Project Economics
- Question: Why is the Odisha capex intensity low at ₹6,300/tonne for a greenfield? (Vikash Singh)
- Answer: The project is modular. JSW already invested in pellet plants and infrastructure separately. The ₹31,600 crore also includes enabling infrastructure for Stage 2 expansion, which will further lower the intensity for future phases (Jayant Acharya).
Leverage and Expansion
- Question: Will the ₹1 lakh crore capex over 5 years stretch the balance sheet? (Parthiv Jhonsa)
- Answer: No. Net debt to EBITDA is currently 2.91x. Strong internal accruals from expanded units like JVML and Dolvi Phase-3, plus ₹32,000 crores from the BPSL deal, will keep ratios prudent (Swayam Saurabh).
CBAM and Exports
- Question: What is the impact of CBAM on export strategy? (Kirtan Mehta)
- Answer: Verification is underway at the asset level. However, domestic demand is growing ~11-13 MT annually, reducing the necessity to export. European prices are expected to rise to absorb the carbon cost (Arun Maheshwari).
Key Takeaway
JSW Steel reported a resilient Q3 FY26 with consolidated steel sales hitting record highs of 7.64 million tonnes despite a multi-year low in steel pricing. The company successfully mitigated price headwinds through a record 61% value-added product mix and cost efficiencies. Strategically, the quarter marked a pivot toward massive deleveraging and growth acceleration, headlined by the ₹31,500 crore BPSL joint venture with JFE Steel and the approval of a 5 MTPA greenfield plant in Odisha. Management has maintained its FY26 production guidance of 30.5 million tonnes and expects margins to expand in Q4 FY26 as the ₹3,500 per tonne price hikes implemented since December fully take effect, more than offsetting the projected $15-$20 per tonne increase in coking coal costs. The company remains on track to achieve a 50 MTPA+ domestic capacity by FY31, supported by a healthy balance sheet and robust domestic demand growth projected at 7-9% for FY27.
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