Detailed Narrative
Q3 FY25 Financial and Operational Performance
Jindal Steel & Power reported a net revenue of INR 11,771 crores in Q3 FY25, reflecting a 5% sequential increase. Production volumes reached 1.99 million tonnes, up 3% year-on-year, while sales volumes improved 5% YoY to 1.90 million tonnes. Despite these operational gains, adjusted EBITDA per tonne saw a 2% sequential decline to INR 11,209, primarily due to higher iron ore costs. However, profit after tax increased 6% QoQ to INR 909 crores, supported by forex gains.
Cost Management and Raw Material Dynamics
The company benefited from a $39 per tonne reduction in coking coal prices during Q3 FY25. This positive impact was partially offset by a INR 96 per tonne increase in iron ore costs, mainly due to lower production from the Tensa mines. Looking ahead to Q4 FY25, management anticipates a further reduction of approximately $10 per tonne in coking coal prices and a INR 100-200 per tonne reduction in iron ore prices, expecting overall costs to stabilize as Tensa mines production recovers.
Capacity Expansion and Commissioning Milestones
Jindal Steel & Power is nearing completion of its current expansion program, with cumulative capex reaching INR 23,612 crores. The new blast furnace at Angul is expected to be commissioned within Q4 FY25, with hot metal production commencing shortly thereafter. The slurry pipeline project is also on track for commissioning by Q1 FY26. The company aims to achieve a 2 million tonne quarterly run rate by Q1 FY26 and full utilization of the new blast furnace capacity by the exit of FY26.
Strategic Capex for Value Addition and Efficiency
Beyond the ongoing expansion, the company announced a new INR 15,000 crores capex plan over the next three years. This strategic investment focuses on cost efficiency, sustainability, and enhancing value-added products, rather than just raw capacity. Key initiatives include a new color-coated line, galvanizing line, a Q&T facility (adding 250,000 tonnes of value addition), a 51:49 JV port project, and investments in rakes and transmission lines, all projected to deliver high-teens ROCE.
Debt and Leverage Position
Consolidated net debt increased to INR 13,551 crores from INR 12,464 crores in the prior quarter, reflecting payouts related to projects nearing commissioning. Despite this increase, the net debt to EBITDA ratio remains healthy at 1.4x. Management expressed confidence in maintaining this ratio below 1.5x across business cycles, indicating that the current leverage level is considered the peak during this expansion phase.
Product Mix and Market Realizations
The product mix in Q3 FY25 saw long products contributing 59% and flat products 41%, a slight shift from the previous quarter's 52% long and 48% flat. The blended Net Sales Realization (NSR) increased marginally by 1% QoQ to INR 60,931 per tonne. While rebar prices showed resilience, flat product prices experienced a 9-10% correction, which impacted the overall blended realizations for the quarter.
Raw Material Security and Logistics Enhancements
The company is advancing its raw material security initiatives, with the Utkal B1 coal mine on track for commissioning by the end of Q4 FY25. Initial production from Utkal C is expected to be around 100,000 tonnes, and the company aims to achieve the EC of 3.37 million tonnes from its captive coal mines in Q4. Additionally, Jindal Steel & Power plans to add approximately 67 rakes to its logistics infrastructure to enhance self-sufficiency in material movement and improve supply chain efficiency.