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JSW Steel Ltd

| Quarterly Financial Results Q3 FY 2025-26

BULLISH SENTIMENT

Report Source

⬤23rd Jan 26

Summary : JSW Steel reported strong Q3 FY26 consolidated performance with record sales, increased EBITDA driven by higher volumes and lower costs, significant capacity expansion plans, and a strategic joint venture for BPSL, while maintaining a positive outlook despite global headwinds.

Quarterly Report Analysis & Insights

Financial Disclosures

  1. Consolidated Total Expenses for Q3 FY26: ₹44,161 crores.
  2. Standalone Total Expenses for Q3 FY26: ₹31,121 crores.
  3. Lower coking coal and power costs contributed to the increase in Adjusted EBITDA.
  4. Standalone Trade receivables Turnover: 17 days (Q3 FY26).
  5. Consolidated Trade receivables Turnover: 20 days (Q3 FY26).
  6. Consolidated Revenue from Operations for Q3 FY26: ₹45,991 crores (up 11% YoY).
  7. Standalone Revenue from Operations for Q3 FY26: ₹32,127 crores (up 1% YoY).
  8. Consolidated Net Debt to Equity: 0.92x (Q3 FY26) compared to 0.93x (Q2 FY26).
  9. Consolidated Net Debt to EBITDA: 2.91x (Q3 FY26) compared to 2.97x (Q2 FY26).
  10. Consolidated Net Debt as of December 31, 2025: ₹80,347 crores.
  11. Standalone Debt Equity Ratio: 0.77 (Q3 FY26).
  12. Standalone Current Ratio: 1.09 (Q3 FY26).
  13. Standalone Total Debts to Total Assets: 0.32 (Q3 FY26).
  14. Both standalone and consolidated financial results are presented and reviewed for the quarter and nine months ended December 31, 2025.

Corporate Overview

  1. Operations in India (Vijayanagar, Dolvi, Kadapa, Jagatsinghpur, Rajpura), USA (Ohio, Texas), Italy, and Mozambique.
  2. Global tariffs and geopolitical challenges.
  3. Risk of lagged effects from tariff measures.
  4. Continued contraction in the real estate sector in China.
  5. Ongoing trade policy and geopolitical headwinds.
  6. Intense competition within the steel industry.
  7. Potential for reduced demand for steel.
  8. Manufacturing steel products, operating as an integrated steel company.
  9. Products extensively used across industries like construction, infrastructure, automobile, electrical applications, and appliances.
  10. Positive and forward-looking, highlighting strong performance, strategic expansions, and sustainability commitments.
  11. Optimistic about India's growth prospects and the company's ability to meet demand.
  12. Industries such as construction, infrastructure, automobile, electrical applications, and appliances.
  13. Single reportable operating segment: steel manufacturing.
  14. Revenue from domestic sales and exports.
  15. Consolidated crude steel capacity: 35.7 MTPA (including 1.5 MTPA in US), with next phase targeting 48.9 MTPA.
  16. Domestic crude steel capacity: 34.2 MTPA.
  17. Vijayanagar plant capacity: 17.5 MTPA, with BF-3 upgradation from 3.0 MTPA to 4.5 MTPA by Q4 FY26.
  18. Dolvi Phase-III expansion from 10 MTPA to 15 MTPA by September 2027.
  19. Kadapa 1 MTPA EAF and Structural mill project expected by FY29.
  20. New 5 MTPA steel plant at Jagatsinghpur, Odisha, by FY30, with expansion potential to 13.2 MTPA.
  21. Dolvi Phase-III expansion from 10 MTPA to 15 MTPA by September 2027.
  22. Kadapa 1 MTPA EAF and Structural mill project by FY29.
  23. New 5 MTPA steel plant at Jagatsinghpur, Odisha, by FY30 with a capex of ₹31,600 crores.
  24. Two 8 MTPA pellet plants at Jagatsinghpur by FY28 and a 30 MTPA slurry pipeline by FY27.
  25. 0.2 MTPA Tinplate and 0.36 MTPA Continuous Galvanising Line at Rajpura.
  26. Consolidated capex spend of ₹3,482 crores in Q3 FY26, with an expected total of ₹15,000-16,000 crores for FY26.
  27. Approval for 2.5 GW renewable energy and 320 MWh battery storage capacity, with 1 GW already commissioned.

Risk Factors

  1. Global tariffs and geopolitical challenges persist.
  2. Intense competition in the steel industry.
  3. Potential for reduced steel demand.
  4. Project time and cost overruns.

Key Drivers

  1. Record quarterly steel sales achieved.
  2. Strategic joint venture for BPSL.
  3. Significant capacity expansion plans progressing.
  4. Strong domestic demand and government capex.

Auditor’s Report

  1. Unmodified conclusion: nothing came to attention suggesting material misstatement or non-disclosure in the unaudited standalone financial results.

Board Commentary

  1. Risks and uncertainties regarding fluctuations in earnings, ability to manage growth, and intense competition.
  2. Time and cost overruns on fixed-price contracts and client concentration.
  3. Reduced demand for steel and challenges in integrating potential acquisitions.
  4. Political instability, legal restrictions on capital raising, and unauthorized use of intellectual property.
  5. Impact of Labour Codes on employee benefits, resulting in an exceptional item of ₹338 crores (standalone) and ₹529 crores (consolidated).
  6. Amalgamation schemes for various subsidiaries (Amba River Coke, Monnet Cement, JSW Retail and Distribution, Piombino Steel Limited) are awaiting regulatory and other approvals.
  7. Acquisition of 100% equity shares of Saffron Resources Private Limited for ₹681 crores.
  8. Approval of a strategic joint venture with JFE Steel for the BPSL steel business.
  9. Increased economic interest in M Res NSW HCC Pty Ltd to 83.33%.

Corporate Governance

  1. Results reviewed by the Audit Committee and approved by the Board of Directors.

Management Discussion & Analysis

Future Strategy

  1. Strategic joint venture with JFE Steel, Japan, for BPSL steel business, enabling cash inflow and deleveraging.
  2. Capacity expansion across various Indian sites (Dolvi, Kadapa, Jagatsinghpur) and enhancement of downstream capabilities.
  3. Commitment to energy transition goals, including 2.5 GW renewable energy and 320 MWh battery storage.
  4. Strategic collaboration with JFE Steel to access new technologies for high-value special steel products.

Industry Overview

  1. Indian finished steel consumption grew 4.6% YoY, crude steel production rose 10.0% YoY in Q3 FY26.
  2. Indian steel imports fell 42.4% YoY, while exports grew 35.5% YoY in Q3 FY26.
  3. China's steel production declined 4.4% YoY, but exports surged 14% YoY in CY 2025.

Macroeconomic Outlook

  1. Global economy growing steadily despite tariffs and geopolitical challenges; IMF raised 2026 growth forecast to 3.3%.
  2. US growth strong due to tech-related investments and consumer spending.
  3. China's growth momentum softened in H2CY25 due to real estate contraction, but manufacturing and exports showed positive growth.
  4. India leads global growth with FY26 GDP growth at 7.4%, supported by strong domestic demand, government capex, and supportive monetary conditions.

Operational Focus Areas

  1. Ramp-up of JVML-Vijayanagar project and upgradation/expansion of Blast Furnace-3 at Vijayanagar.
  2. Reducing steel product inventories.
  3. Monitoring developments related to new Labour Codes.
  4. Achieving CO2 emission reduction goals (42% by 2030, net neutral by 2050) and powering operations with renewable energy by 2030.
  5. Implementing sustainability targets including no net-loss in biodiversity, improved air quality, reduced water consumption, and Zero Liquid Discharge.

Performance Drivers

  1. Highest ever quarterly Saleable Steel Sales (7.64 million tonnes, up 14% YoY) in Q3 FY26.
  2. Adjusted EBITDA increased by 22% YoY, driven by higher volumes and lower coking coal and power costs.
  3. JVML-Vijayanagar project reached rated capacity, with Adjusted EBITDA up 47% QoQ due to higher volumes.

Risk Control Measures

  1. Monitoring developments and clarifications regarding new Labour Codes.
  2. Forming strategic joint ventures and partnerships (e.g., with JFE Steel) to strengthen business and deleverage.
  3. Focusing on capacity expansion and enhancing downstream capabilities to meet market demand.
  4. Committing to sustainability initiatives and CO2 reduction targets to ensure long-term operational resilience.

Critical Risks

  1. Fluctuations in earnings and intense competition within the steel industry.
  2. Time and cost overruns on fixed-price, fixed-time frame contracts.
  3. Reduced demand for steel and challenges in successfully integrating potential acquisitions.
  4. Political instability, legal restrictions on raising capital, and unauthorized use of intellectual property.
  5. General economic conditions affecting the industry, and ongoing trade policy and geopolitical headwinds.