PL Capital on JSW Steel Q1FY26 Results: Should You Buy, Hold, or Sell the Stock Now?
- 22nd July 2025
- 02:00:00 PM
- 4 min read
Mumbai | July 22 – JSW Steel delivered a steady performance in the first quarter of FY26, supported by strong volume growth and lower input costs, even as softer steel prices and global challenges weigh on the sector’s near-term outlook. For investors, the key question is whether to buy, hold, or wait on JSW Steel amid its ongoing expansion and operational discipline.
The company reported a net profit of ₹21,800 crore for Q1FY26, a sharp increase of 159% year-on-year, with management attributing the rise to “strong domestic demand and operational efficiencies,” even as forex losses on Euro loans and shutdown costs were absorbed during the quarter. Sequentially, profit rose 25%.
Revenue for the quarter was up marginally by 0.5% year-on-year to ₹431,500 crore, driven by a 9.3% increase in consolidated steel volumes to 7.49 million tonnes as the ramp-up of its 5mtpa JVML capacity continued. Domestic sales volumes rose 13% year-on-year, while exports declined due to softer overseas demand and geopolitical uncertainties.
Margins Expand Despite Softer Prices
While steel prices softened toward the quarter-end due to monsoon disruptions and cheaper imports, management noted, “Average consolidated net sales realizations improved 7% QoQ to ₹60,101 per tonne,” supporting topline performance earlier in the quarter.
EBITDA rose 44% year-on-year to ₹79,200 crore, while EBITDA per tonne grew 34% year-on-year to ₹11,270, aided by a decline in coking coal consumption costs by USD 14/t and lower mining royalties. Other expenses per tonne fell 16% year-on-year, reflecting operational cost discipline.
Subsidiary performance was mixed, with Bhushan Power and Steel (BPSL) posting a 13% EBITDA increase, the Ohio (US) operations turning marginally profitable, and Italy operations continuing to underperform despite volume recovery.
Financial Snapshot
JSW Steel’s Q1FY26 performance reflected operational strength despite a challenging pricing environment, with steady volume growth and lower input costs supporting profitability. The company’s leverage remains manageable, while key operating metrics showed improvement during the quarter.
- Revenue: ₹431,500 crore, up 0.5% year-on-year
- Net Profit: ₹21,800 crore, up 159% year-on-year; up 25% sequentially
- EBITDA: ₹79,200 crore, up 44% year-on-year
- EBITDA per tonne: ₹11,270, up 34% year-on-year
- Consolidated steel volumes: 7.49 million tonnes, up 9.3% year-on-year
- Domestic volumes: 5.98 million tonnes, up 13% year-on-year
- Average realizations: ₹60,101 per tonne, up 7% sequentially
- Net debt: ₹798.5 billion, up ₹33 billion QoQ due to working capital needs
Expansion Plans
JSW Steel is progressing with its expansion pipeline to support long-term volume growth and cost reduction.
- The second converter at Vijayanagar is set for commissioning in Q2FY26.
- Dolvi Phase 3 expansion (10mtpa to 15mtpa) remains on track for completion by September 2027.
- The slurry pipeline project, with 190km completed out of 300km, is expected to lower logistics costs by ₹1,000 per tonne once operational by FY27.
- Renewable energy initiatives continue, with 1GW of the planned 2.5GW capacity targeted by Q2FY26, aligning with JSW’s cost and sustainability goals.
Management noted, “We expect volume/EBITDA CAGR of 12%/40% over FY25-27E, driven by capacity ramp-up and higher value-added product mix.”
PL Capital View
At the current price of ₹1,034, JSW Steel trades at 8.9x FY26E and 7.3x FY27E EV/EBITDA. PL Capital maintains a ‘Hold’ rating with a target price of ₹1,068, valuing the stock at 7.5x March 2027 EV/EBITDA estimates.
“Our view is that while JSW Steel’s operational delivery, disciplined cost management, and capacity expansion are positives for long-term investors, softer steel prices and higher imports may cap near-term upside,” Noted PL Capital “Investors may consider waiting for clearer post-monsoon demand recovery signals and monitoring government policy on steel imports before adding fresh exposure, while existing investors can continue to hold.”
Outlook
JSW Steel remains well-positioned to benefit from India’s infrastructure-led growth cycle, backed by capacity additions, cost-saving initiatives, and a growing value-added product mix. However, near-term caution is warranted given seasonal demand slowdowns and import pressures, which could impact realizations in the coming quarters.
“Steel prices have started correcting due to monsoon-led weakness and cheaper imports,” management highlighted, underscoring the need for investors to monitor pricing and demand trends closely while aligning exposure to India’s long-term structural growth potential in the steel sector.
PL Capital
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
