JSW Steel Q1 FY27 earnings call

The global growth outlook remains intact, with the IMF lowering its 2026 forecast to 3% but upgrading 2027 to 3.4%. Manufacturing activity was resilient due to inventory restocking and AI-related investments, though disinflation stalled. India continues to be a fast-growing economy, with RBI projecting 6.6% growth for FY27. Industrial production and exports performed well, and the automotive sector saw sustained double-digit expansion in passenger and commercial vehicle sales following GST rate cuts in September 2025. Rural demand remains healthy, supported by a strong Rabi harvest, though below-normal monsoon is a key risk. The investment cycle is strengthening, driven by public capex and momentum in commercial real estate, energy, data centers, defense, and maritime sectors.

JSW Steel's Indian operations achieved approximately 94% capacity utilization in Q1 FY27, significantly higher than 88% in Q1 last year, excluding the BF-3 shutdown. Consolidated crude steel production was 6.59 million tonnes, with Indian operations contributing 6.35 million tonnes (up 3% YoY). Consolidated steel sales grew 4% YoY to 6.25 million tonnes. The company recorded its best-ever Q1 Flats sales, up 9% YoY, and hot rolled sales, up 18% YoY. VASP sales grew 8% YoY, accounting for 61% of total sales, and institutional sales were up 5% YoY. Sales to the Auto and Renewable sectors increased by 18% and 25% YoY, respectively. However, Longs sales were impacted by labor and diesel availability issues, and retail sales faced pressure from channel destocking and higher imports.

JSW Steel reported consolidated revenues of ₹47,364 crores and an Adjusted EBITDA of ₹9,373 crores, resulting in a 20% EBITDA margin. PAT stood at ₹4,696 crores. Steel prices recovered from early January, with flat prices seeing moderate decline and long prices a significant correction in Q1. Input costs were slightly higher than guidance due to the Middle East conflict, with coking coal prices increasing by ~$17 per ton and iron ore costs also rising. Overseas operations performed well, with Ohio EAF and Texas Plate and Pipe mill generating a combined EBITDA of $16 million, and the Italian rail mill reporting EUR7 million EBITDA.

Project SEED, JSW Steel's decarbonization initiative, has achieved a cumulative emissions reduction of approximately 5 million tCO2 since 2022. The company systematically increased scrap utilization by 16% YoY in Q1. JSW Steel also launched its GreenEdge brand, a low-emission steel product supported by a carbon bank of 1 million tons of CO2 credits. The first GreenEdge export order was successfully executed in Q1, marking a key milestone in market adoption.

The BF-3 expansion at Vijayanagar (from 3 to 4.5 million tonnes) was completed and is ramping up, expected to add incremental volume from Q2 FY27. The company conducted the groundbreaking ceremony for its 1 million tonne EAF and structural project at Kadapa, targeting commissioning by FY29. Downstream projects at Vijayanagar, Khopoli, and Rajpura are adding 0.44 million tonnes of capacity, and a rail capability is being added to the 1 million tonne structural mill at Raigarh. JSW Steel is enhancing raw material security, with 13 out of 25 captive iron ore mines operational and plans to operationalize the rest. The company won the Pissurlem mine in Goa in May 2026. On the coking coal front, JSW Steel took over the Dugda Washery from BCCL in June, with plans to modernize and expand its capacity. The MdR project in Mozambique and 3 captive mines in India are also progressing.

JSW Steel incurred a capex of ₹4,900 crores in Q1 FY27 and expects to spend between ₹22,000 crores to ₹24,000 crores for the full financial year. The second tranche of JFE's equity investment of INR7,875 crores for the JSW JV joint venture transaction was received on June 30, completing the JV transition. Net debt stands at ₹46,157 crores, substantially down from FY25, with leverage at 1.46x and gearing at 0.42x. The company reiterated its comfort level for leverage to be below 2.5x, having revised maximum caps from 3.75x to 3x for leverage and 1.75x to 1.25x for gearing. Historically, JSW Steel maintains 50-55% foreign debt in its total mix and has taken steps to hedge against forex volatility.

India's steel consumption grew by 8.3% in Q1, but the country became a net importer after safeguard duties were imposed in December 2025, with imports up 22% QoQ and exports down 16% QoQ. The government has initiated anti-dumping investigations against imports from Japan, Russia, and China. In China, steel production was down 3.9% and consumption declined by 4% during Jan-May. Management expects India steel demand to grow 7-9% in FY27, adding 12-13 million tonnes of incremental demand. While coking coal costs are expected to be higher in Q2, they are trending down for Q3. Iron ore costs are also trending down, favorable for Q2 and Q3. TMT prices saw a decline of ₹7,000-₹8,000 per tonne from the beginning of Q1, while hot rolled prices increased by ₹1,000 from Q4 to Q1, with moderate corrections expected. The company's exposure to TMT is approximately 10% of overall volume.