Jindal Steel Q3 net profit falls almost 80% on higher costs; revenue up 11%

Jindal Steel, India’s fourth-largest steelmaker, announed its Q3 earnings after market hours on Friday, reporting a decline in profit during the December quarter due to weak steel prices, higher costs and one time loss related to labour code implementation. Earlier, its shares closed 1.91% lower on the Bombay Stock Exchange while the Sensex closed 0.36% lower.

The company, headed by billionaire Naveen Jindal, reported an almost 80% drop in net profit attributable to the owners, to ₹190 crore from to ₹951 crore in same quarter last year, according to the company’s exchange filings. Profit fell well short of the ₹526-crore average estimate from a Bloomberg poll of 11 analysts.

Revenue for the quarter rose 10.9% to ₹13,026 crore from to ₹11,751 crore in the same quarter last year. The rise in revenue was due to an increase in steel production and higher sales volume, though these benefits were offset by lower steel prices.

The steelmaker’s consolidated crude steel production rose 25% to 2.51 million tonnes from the September quarter, while sales volumes climbed 22% to 2.28 million tonnes. Ebitda fell 25% to ₹1,634 crore from ₹2,184 crore in the same quarter last year, on account of higher input costs.

Suman Kumar, assistant vice-president for metals and mining at brokerage Philip Capital, said, “The results clearly indicate an impact on Ebitda, which has declined due to higher-than-anticipated raw-material costs. Beyond this expense, profitability has seen a further drop due to an increase in depreciation and interest expenses."

He added, “Weak steel prices during the quarter also weighed on performance. While revenues were higher due to increased production and volumes, the benefit of higher volumes was more than offset by lower realizations."

Net debt rises

Net debt increased to ₹15,443 crore as of 31 December from ₹14,156 crore at the end of September, primarily due to ongoing capital expenditure. The company incurred ₹2,076 crore of capital expenditure during the quarter because of expansion projects at the Angul facility. The three-million-tonnes-per-annum basic oxygen furnace-III at Angul remains on track for commissioning in the fourth quarter of FY26, the steelmaker said. Once operational, it will increase the company’s steelmaking capacity to 15.6 million tonnes per annum.

Jindal Steel also recognised a one-time exceptional charge of gratuity and compensated absences of ₹55 crore during the quarter, adding that it was in the process of evaluating whether the new labour codes would have any other impact on employee benefits.

Prices of steel used in cars and home appliances fell to a nine-month low in November, while steel used in construction and infrastructure was at its cheapest in nearly five years, owing to oversupply and weak demand from large infrastructure projects, Mint reported last week. Demand was further dented after a temporary safeguard duty lapsed on 7 November, with no clarity on an extension until the end of December.