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    Jindal Steel

    JINDALSTEL
    Metals & Mining·1 May 2025
    Management Summary

    Jindal Steel & Power delivered a robust Q4 FY25, achieving record annual production and sales, supported by strong volume growth and improved capacity utilization. The company significantly deleveraged, with net debt to EBITDA falling to 1.26, driven by effective working capital management. While the quarter saw a substantial impairment of overseas assets and one-off expenses, management provided optimistic guidance for FY26 production and sales, underpinned by ongoing capacity expansion and cost optimization efforts.

    Highlights

    5
    • Consolidated gross revenue for Q4 FY25 grew 13% QoQ to INR 15,525 crores, driven by volume growth.

    • Adjusted PAT for Q4 FY25 increased 16% QoQ to INR 1,099 crores, adjusted for exceptional write-off.

    • Net debt to EBITDA reduced from 1.40 to 1.26 in Q4 FY25, despite INR 2,312 crores capex in the quarter.

    • Working capital reduced by INR 2,701 crores in Q4 FY25 and INR 3,146 crores for the full FY25, indicating sustainable improvements.

    • Highest ever production and sales in FY25, with crude steel production at 8.12 million tonnes (up 2% YoY) and sales at 7.97 million tonnes (up 4% YoY).

    Concerns

    3
    • One-time non-recurring expenses of INR 231 crores were booked in Q4 FY25, including provisions for old GST credits, aged operational advances, and inventory cleanups.

    • An impairment of INR 1,229 crores (USD 144 million) was taken for overseas assets, primarily Australian assets under care and maintenance.

    • India remained a net importer of steel in FY25 for the second consecutive year, with 4.3 million tonnes of net imports, impacting domestic prices despite safeguard duties.

    What Changed1

    vs Q1 FY26

    Guidance items13 → 10 (-3)

    Key financials

    Single quarter

    07 metrics
    1. 01Consolidated Gross Revenue₹15,525 Cr+13%QoQ
    2. 02Adjusted EBITDA₹2,482 Cr
    3. 03Adjusted EBITDA per tonne₹11,651
    4. 04Adjusted PAT₹1,099 Cr+16%QoQ
    5. 05Production Volume2.11 MT+6%QoQ

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    ₹2,312 crores

    Debt

    1.3x EBITDA

    M&A

    Allied Strips Limited

    acquisition · closed · Consideration ₹NaN (cash)

    Guidance & targets

    10
    CategoryTargetPriority
    Volume
    Crude Steel Production
    9-10 million tonnes
    Medium
    Volume
    Sales Volumes
    8.5-9 million tonnes
    Medium
    Cost
    Coking Coal Consumption Cost
    Lower by $10-$15 per tonne
    High
    Project Timeline
    Angul BF2 First Hot Metal
    Q1 FY26
    High
    Project Timeline
    BOF2 Commissioning
    Q2 FY26
    High
    Project Timeline
    Slurry Pipeline Full Project & Benefits
    H2 FY26
    Medium
    Mining
    Utkal B1 Mine Opening
    H1 FY26
    High
    Leverage
    Net Debt to EBITDA
    Below 1.5x
    High
    Profitability
    ROCE for projects
    18-20%
    High
    Product Mix
    Exit Product Mix (Flats/Longs)
    ~70% flats, 30% longs
    Medium

    Angul BF2 First Hot Metal Production

    Q1 FY26
    CurrentCommissioning activities begun (gas stoves lit)
    TargetFirst hot metal production

    Why it matters

    This is a key milestone for the major capacity expansion at Angul, directly impacting future production volumes and operational ramp-up.

    The commissioning activity for the Angul blast furnace 2 have already begun with the lighting of gas stoves. We are on track to deliver the first hot metal from the BF2 in Q1FY26.

    How to verify

    guidance_and_targets[metric='Angul BF2 First Hot Metal']

    Risks & concerns

    3
    RiskSeverity

    High Chinese Steel Exports and Global Price Impact

    China's weakening steel demand leads to elevated exports, impacting global prices. India was a net importer of 4.3 million tonnes in FY25, and while safeguard duties are in place, their effectiveness against further price drops is a concern.Management acknowledged

    medium

    Repetitive Impairment of Australian Overseas Assets

    The company has taken repetitive impairments on its Australian subsidiary, which is under care and maintenance, raising questions about its long-term value and strategic options. Remaining value is approximately USD 150 million, and options are being evaluated.Analyst acknowledged

    medium

    Volatile Business Environment

    The business environment remains very volatile, requiring management to constantly realign its product mix and strategies as per market needs.Management acknowledged

    low

    Q&A highlights

    8

    “The remaining value there is fully supported by underlying asset value, and we are carrying forward a value of approximately USD150 million right now. And for future, we are currently evaluating various options, and we will update the investor community at an appropriate time.”

    Analyst questioned the recurring impairment and lack of utility from the Australian subsidiary; management confirmed ongoing evaluation of options but did not commit to a specific exit strategy or timeline.

    asked by Amit Dixit

    3 min read7 chapters

    Detailed Narrative

    01

    Q4 FY25 Performance and Annual Highlights

    Jindal Steel & Power reported its highest ever production and sales in FY25, with crude steel production growing 2% YoY to 8.12 million tonnes and sales up 4% YoY to 7.97 million tonnes. For Q4 FY25, production increased 6% QoQ to 2.11 million tonnes, and sales volume rose 12% QoQ to 2.13 million tonnes. Consolidated gross revenue for the quarter reached INR 15,525 crores, a 13% QoQ increase, primarily driven by strong volumes. Adjusted PAT for Q4 FY25 stood at INR 1,099 crores, up 16% QoQ, after adjusting for one-off📎 items.

    02

    Working Capital Management and Deleveraging

    The company demonstrated robust working capital management, achieving a reduction of INR 2,701 crores in Q4 FY25 and INR 3,146 crores for the full FY25. These efforts led to a significant improvement in the net debt to EBITDA ratio, which decreased from 1.40 in the previous quarter to 1.26. Management emphasized that these working capital initiatives are sustainable and represent a permanent improvement, contributing to the company's financial strength despite ongoing capital expenditure.

    03

    Capacity Expansion and Project Progress

    Jindal Steel is on track with its major expansion projects. Commissioning activities for Angul Blast Furnace 2 (BF2) have commenced, with the first hot metal expected in Q1 FY26. Other key projects, including BOF2, slurry pipeline, and Shree Bhoomi Power Plant, are progressing as per schedule, with BOF2 expected to be operational in Q2 FY26 and slurry pipeline benefits anticipated in H2 FY26. The total capex incurred in the current program, including sustenance, amounts to INR 25,924 crores, with INR 19,137 crores remaining for balance outstanding capex (excluding JV investments).

    04

    Raw Material Security and Cost Outlook

    The company has secured mine opening permission for Utkal B1 mines, which hold approximately 148 million tonnes of reserves with an annual EC of 5.5 million tonnes, and expects mining to commence in H1 FY26. Additionally, Jindal Steel won the Saradhapur Jalatap East coal block. For Q1 FY26, coking coal consumption costs are projected to be lower by $10-$15 per tonne, while iron ore costs are expected to trend with domestic steel prices, contributing to cost optimization efforts.

    05

    FY26 Guidance and Product Mix Strategy

    The company has restarted its annual volume guidance, targeting crude steel production of 9-10 million tonnes and sales volumes of 8.5-9 million tonnes for FY26. Management described this guidance as conservative, expressing confidence in exceeding these targets. Upon full commissioning of all facilities, the company aims for an exit product mix of approximately 70% flats and 30% longs, an improvement from the FY25 mix of 40-60%, though this mix may be realigned based on market needs.

    06

    Exceptional Items and Impairment

    Q4 FY25 included INR 231 crores in one-off📎, non-recurring📎 expenses, covering provisions for old GST input credits, aged operational advances, inventory cleanups, carbon credit purchases for Australian operations, deallocated mines, and old insurance receivables. Furthermore, the company recorded an impairment of INR 1,229 crores (USD 144 million) for its overseas assets, primarily Australian assets under care and maintenance, based on an independent valuation, with the remaining value estimated at USD 150 million.

    07

    Market Dynamics and Safeguard Duty Impact

    India remained a net importer of steel in FY25, with 4.3 million tonnes of net imports, influenced by weakening Chinese demand and high exports impacting global prices. The government's introduction of a 12% safeguard duty for 200 days on select steel imports is expected to help curb cheap steel inflows and support domestic consumption. Management anticipates flat product prices to remain stable due to this duty and does not foresee a significant further drop in Chinese steel prices, supported by upward trends in other global markets.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.