Detailed Narrative
Global and Indian Economic Outlook
The global economic scenario shows positive momentum, with the IMF raising its CY25 global growth forecast to 3.2% from 3%. India continues to be a standout, with the RBI revising its FY26 real GDP growth rate to 6.8% from 6.5%. This robust economic backdrop is expected to support steel demand, particularly in the construction sector post-festive season.
Steel Industry Dynamics and Challenges
The steel industry faced headwinds in Q2 FY26, primarily from a surge in low-priced Chinese steel exports, which reached 88 million tonnes YTD. This pressured global prices and contributed to domestic HRC prices remaining weak. India became a net importer of steel for the sixth consecutive quarter, importing 0.6 million tonnes despite safeguard duties. However, management anticipates stabilization and improvement in steel prices post-festive season as construction demand returns.
Q2 FY26 Operational and Financial Performance
Jindal Steel's Q2 FY26 performance was impacted by a prolonged monsoon and planned shutdowns, leading to a 5% QoQ decline in production to 2 million tonnes and a 2% QoQ drop in sales volume to 1.87 million tonnes. Consolidated gross revenue fell 6% QoQ to INR 13,505 crores. Adjusted EBITDA stood at INR 1,875 crores, with EBITDA per tonne at INR 10,010. PAT for the quarter was INR 635 crores, with a non-recurring📎 shutdown cost of INR 174 crores.
Capacity Expansion and Project Progress
Q2 FY26 was a defining quarter for Jindal Steel, with the commissioning of two major plants at Angul: the 4.6 MTPA Bhagavati Subhadrika Blast Furnace-II and the 3 MTPA Basic Oxygen Furnace-2. These additions more than doubled hot metal capacity at Angul to 8.85 MTPA and increased crude steel capacity to 9 MTPA. The company is on track to achieve 15.6 MTPA steel making capacity by the end of FY26, with other projects, including DRI and BOF 3, expected to be commissioned in Q4 FY26. The Utkal B1 mine is also expected to begin output by the end of Q3 FY26.
Cost Management and Product Mix Strategy
The company successfully reduced its actual coking coal cost by $4 per tonne in Q2 FY26, aligning with its guidance. Management expects further overall cost structure savings of 2% to 3% over Q2 immediately, despite an anticipated $3 to $5 per tonne increase in coal consumption cost in Q3 FY26. A strategic focus on value-added sales resulted in the value-added component reaching a record 73% of total sales, and the flat product mix improved from 44% to 49% QoQ, contributing to better realizations.
Capital Allocation and Debt Profile
Jindal Steel's consolidated net debt decreased by INR 244 crores sequentially to INR 14,156 crores as of September 30, 2025, primarily due to efficient working capital management. The net debt-to-EBITDA ratio stood at 1.48x, reinforcing the company's commitment to cap this ratio at 1.5x. Total capex in Q2 was INR 2,699 crores, with INR 30,849 crores spent out of a total announced capex of INR 47,043 crores, largely funded through internal accruals. H2 FY26 capex is projected to be between INR 7,000 crores and INR 9,000 crores.
AI Adoption for Operational Efficiency
Jindal Steel is actively integrating AI and IoT sensors to transform operations, aiming for safer, faster, smarter, and more efficient processes. Initiatives include predictive maintenance for critical equipment, computer vision for PPE compliance and near-miss detection, and AI models for forecasting power demand and optimizing blast furnace operations. While it's early to quantify specific cost savings, these efforts are expected to drive higher productivity and lower costs in the long term.