Detailed Narrative
Strong Profitability Despite Volume Headwinds
Jindal Steel reported a robust Q1 FY26 in terms of profitability, with Consolidated Adjusted EBITDA reaching ₹2,984 crores and Adjusted EBITDA per tonne increasing by 35% QoQ to ₹15,680. Consolidated PAT also saw a significant rise of 36% QoQ to ₹1,496 crores. This strong performance was primarily driven by higher average selling prices (ASP) and effective cost management, including a notable $11 per tonne reduction in coking coal costs. However, sales volume for the quarter declined by 10% QoQ to 1.90 million tonnes, and production was marginally down by 1% QoQ to 2.09 million tonnes, attributed to seasonal weakness and the early onset of monsoon.
Strategic Project Commissioning Underway
The company is making significant progress on its strategic expansion projects. The first 0.2 million tonnes continuous galvanizing line at Angul has been successfully commissioned. Commissioning activities for Blast Furnace-2 (BF-2) have begun, with the first hot metal expected in August 2025, placing its full commissioning in Q2 FY26. Basic Oxygen Furnace-2 (BOF-2) is also expected to start very close to BF-2. The Slurry Pipeline is targeted for commissioning within the current fiscal year, and a new color coating line is anticipated by the end of Q3 FY26, with two more lines (galvanizing and color coating #2) by Q4 FY26.
Debt Management and Capital Expenditure
Consolidated net debt as of June 30, 2025, stood at ₹14,400 crores, an increase of ₹2,443 crores QoQ, mainly due to working capital build-up. The net debt to EBITDA ratio was 1.49x, which management reiterated is at the top of their self-imposed 1.5x limit and will not be breached, expecting inventory liquidation in Q2 to improve cash position. Total CAPEX for Q1 FY26 was ₹2,226 crores. The company has a total announced CAPEX of ₹47,043 crores, with ₹28,150 crores spent till June 30, 2025, and an annual CAPEX plan of ₹7,500-10,000 crores for FY26.
Raw Material Security and Mining Assets
Jindal Steel is enhancing its raw material security through strategic mining acquisitions. The company won the Roida-I iron ore and manganese block in Odisha, with an EC capacity of 3 million tonnes per annum and estimated reserves of 126 million tonnes, planning to extract around 1.6 million tonnes in FY26. Additionally, the Saradhapur Jalatap coal block, with a geological reserve of 3.2 billion tonnes, was recently won and is undergoing exploration. The existing Utkal B1 coal mine is on track to meet the company's coal requirements from its own mines this fiscal year, with 90-95% of Q1 thermal coal coming from captive sources.
Market Outlook and Demand Revival
The domestic steel market experienced some softness in Q1, with HRC prices correcting due to weak demand and TMT prices drifting down with the early monsoon. However, management noted that Chinese HRC imports have practically stopped due to the provisional 12% safeguard duty and improved Chinese prices. Looking ahead, early indicators suggest a possibility of a market turnaround, with strong demand revival signs already visible in August from the construction, yellow goods, and construction equipment sectors. Management expects inventory to ease in Q2 and anticipates good demand quarters ahead.