Jindal Steel Q2 preview: Weak earnings likely as steel prices slide and monsoon dampens demand
As Jindal Steel navigates a tough market with plummeting prices and seasonal slowdowns, the upcoming earnings report could reveal critical information on its strategic plans. Will the company adapt successfully, or will it struggle to maintain its guidance?
Jindal Steel Ltd is expected to post weaker earnings for the September quarter, in line with its domestic peers, as lower sales due to an extended monsoon and weaker prices are likely to have eaten into its profits, analysts said.
The Naveen Jindal-led steelmaker will announce its earnings for the July-September period—the second quarter of 2025-26—on Tuesday.
During a post-earnings interaction in August, the company’s management had sounded upbeat about a recovery in demand and easing of its inventory levels.
“We are in the month of August now, and we have already started seeing the sign of revival of demand from the construction side," Sushil Kumar Pradhan, head of sales and marketing at Jindal Steel, had said.
Heavy machinery and equipment used in construction had shown strong growth, indicating robust demand in the construction sector, he said, adding that Jindal Steel expected its inventory levels to ease in the September quarter. However, that did not materialize.
Brokerages JM Financial, Anand Rathi, and Motilal Oswal expect Jindal Steel’s second-quarter sales volumes to have declined by about 5% from the preceding three months to 1.8 million tonnes. Weak steel prices are also expected to dent the company’s earnings.
Seasonal weakness
To be sure, the July-September quarter coincided with monsoon rains in India, when construction activity slows, resulting in lower demand for steel.
Jindal Steel has a higher exposure to the construction industry than its peers as about three-fifths of the steel it produces are categorised as long products, which are used in making rebars and rails. Rebars, or reinforcing bars, are used in concrete to boost strength and support and are crucial for the structural stability of buildings.
For several other steelmakers, a bulk of their production is dedicated to flat steel, which goes into making automobiles, consumer goods, and corrugated roofs.
Prices of long steel products fell much more sharply than that of flat products in the September quarter due to the seasonal slowdown in construction, accelerated by the GST rate cut on cement, Elara Capital said in an 8 October note. This is expected to weigh more heavily on Jindal Steel’s earnings.
According to an Anand Rathi report dated 7 October, domestic prices of hot rolled coil steel declined by about 4.8% quarter-on-quarter to around ₹49,500 per tonne in the September quarter. Prices of long steel products, meantime, fell 14.5% sequentially to roughly ₹48,000 per tonne.
As a result, Jindal Steel’s realizations—or the revenue generated per tonne of steel sold—are expected to decline significantly in the September quarter than for peers such as JSW Steel Ltd, Tata Steel Ltd, and Steel Authority of India Ltd.
So far in 2025 (until 24 October), Jindal Steel’s shares had gained 7.47% on NSE, compared with an 8.64% rise in the benchmark Nifty 50 index over the same period. The stock has largely tracked the broader market, showing steady but slightly below-par performance.
On Monday afternoon, a day ahead of the company’s results, Jindal Steel was up 1.75% at ₹1,025.50 per share, while the Nifty 50 was up 0.75%.
Mint lists five major areas to focus on in Jindal Steel’s second-quarter results:
Volume guidance
Jindal Steel has guided for FY26 steel production of 9–10 million tonnes and sales volumes of 8.5--9 million tonnes. To stay on track, the steelmaker would need to achieve quarterly sales of around 2 million tonnes. However, its first-quarter (April–June) sales stood at 1.90 million tonnes, and is expected to decline further to 1.80 million tonnes in the second quarter.
Analysts will closely watch the company’s commentary to see if Jindal Steel can maintain its guidance, as questions remain over how it plans to meet the target when steel prices are low.
Revenue and profitability
According to analysts at Motilal Oswal, Jindal Steel’s second-quarter net sales are expected to fall to ₹10,710 crore—12.9% lower than in the first quarter and 4.5% down from the same period last year.
September-quarter earnings before interest, taxes, depreciation, and amortization (ebitda) is expected to decline to ₹1,580 crore, down 47.3% from the first quarter and 28% from the second quarter of FY25.
Anand Rathi expects Jindal Steel’s ebitda/per tonne to fall 40.4% sequentially to ₹9,434 in the second quarter. “Jindal Steel’s EBITDA/tonne is expected to drop below ₹10,000 after a gap of almost 12 quarters, in line with falling metal prices," said Parthiv Jhonsa, vice president at Anand Rathi.
Clarity on international acquisition
Analysts and investors will watch for commentary on the management’s plans for a potential acquisition of Thyssenkrupp’s German steel business through privately held Jindal Steel International.
They will seek clarity on how the Naveen Jindal group will fund the buyout, if it will impact the company’s expansion plans in India, and if the two companies could merge in the future. They will also be looking for information on the liability of pension funds and valuation.
To be sure, the Thyssenkrupp acquisition bid is through a privately held firm of the Jindal family that is separate from the listed company.
Demand expectations
The Motilal Oswal analysts wrote in their October note that “guidance on pricing and domestic demand will be critical". Steel prices for construction and infrastructure fell to a near 5-year low in October, with rebar prices at around ₹47,000 per tonne, the lowest since November 2020, according to BigMint, a commodities market research platform.
Dhruv Goel, chief executive of BigMint, said steel prices are likely to remain under pressure due to high inventories, weak offtake, and seasonal slowdown, with any recovery dependent on a sustained pickup in construction and infrastructure demand, possibly post-festive season or through policy reforms. “Uncertainty surrounds the extent and timing of any demand uptick," he said.
Project updates
Jindal Steel recently added 3 million tonnes per annum of crude steel capacity at its Angul plant, bringing its total steelmaking capacity to 9 mtpa. Analysts will closely watch the timeline for ramping up this new capacity. Another 3 mtpa expansion at Angul is scheduled for commissioning this financial year, which will boost Jindal Steel’s total steel-making capacity to 15.6 mtpa from 9.6 mtpa.
Analysts at Nuvama in their 13 August note cautioned that delays in Jindal Steel’s expansion and any major high-cost acquisitions could be key risks for the company, making expansion timelines and project costs closely monitored factors for investors.
Jindal Steel was also allotted one iron ore and manganese mine of 3 mtpa, having reserves of 126 mt at Roida-I to supplement supply, as one of the company’s Tensa mine faces substantial reserve depletion and declining ore quality. “Commentary on the details on ramp-up and production percentages will be important as this new block is expected to help offset the shortfall from the aging mine" said Jhonsa of Anand Rathi.
topics
