Jindal Steel to have a CEO after five years as Gautam Malhotra is elevated

Billionaire Naveen Jindal-owned Jindal Steel Ltd appointed Gautam Malhotra as its chief executive officer on Tuesday, while it reported below-expectations second-quarter earnings.

Malhotra, who joined the company in May 2024, has been elevated as CEO with effect from 28 October, the company said in an exchange filing alongside its September-quarter earnings statement. Malhotra has since worked with the steelmaker’s mining, production, HR, logistics, technology, AI adoption and sales verticals.

Since joining, he has been involved with the company’s commercial and logistics strategy.

Malhotra comes from outside the steel industry and is a former entrepreneur and operations specialist. Before joining the company, he founded FuelBuddy, a doorstep fuel delivery company that now operates in five countries.

According to Satyadeep Jain, lead analyst for cement, metals, mining & utilities at Ambit Capital, the new CEO's skills will be watched, given that he does not come from a steel industry background.

The appointment came almost five years after Sudhanshu Saraf, the company’s previous CEO, quit in 2020. After Saraf quit, Bimlendra Jha joined as the company's managing director in 2022 and left in 2024.

Q2 profit, realizations drop

Jindal Steel reported a net profit attributable to owners of the equity at ₹638 crore for the second quarter, a decline of about 26% from a year earlier and a 58% drop sequentially, according to its exchange filings. The profit missed an average of ₹697 crore estimated by 14 analysts polled by Bloomberg.

The company’s revenue from operations fell 5% over the June quarter to ₹11,686 crore, mainly due to weaker realizations and lower volumes.

“Roughly 3.4% of the decline came from lower realisations, which was in line with the reduction in steel price during the quarter, while the remaining 1.6% was due to softer volumes,” said Parthiv Jhonsa, vice president at Anand Rathi Institutional Equities. “It’s a mix of both price and volume pressures.”

The steelmaker's production fell 5% sequentially to 2 million tonnes sales declined 2% to 1.87 MT.

Prices of long steel products fell 14.5% sequentially in the September quarter to roughly ₹48,000 per tonne, according to a 7 October Anand Rathi report. The decline was sharper than that of flat products, used in automobiles and consumer goods, due to the seasonal slowdown in construction, accelerated by the GST rate cut on cement, Elara Capital said in an 8 October note.

Jindal Steel’s earnings before interest, tax, depreciation and amortization–or Ebitda, a measure of operating income–also fell almost 31% sequentially to ₹2,081 crore.

Despite a slight reduction in raw material costs, higher staff costs and other expenses impacted reported Ebitda, Jhonsa said.

The second quarter is a seasonally weak period as it coincides with monsoons, when construction activity slows, resulting in lower demand for steel.

The fall in net profit was driven by an exceptionally weak quarter for the long products segment, where profitability contracted sharply due to a steep drop in prices amid weak demand and additional supply, said Jain of Ambit Capital.

Long steel margins have compressed sharply, with loses for secondary players across the value chain, Jain said. Current spreads are unlikely to be sustainable for long as these could warrant some supply cuts, he said, adding that these have historically been trough spreads for the industry.

Jindal Steel has greater exposure to the construction sector compared to peers, with about 60% of its output comprising long products such as rebars and rails. Rebars are embedded in concrete to enhance strength and structural stability in buildings.

Earlier this month, Naveen Jindal’s brother, Sajjan Jindal-led JSW Steel Ltd also reported a sequential decline of nearly 26% in net profit to ₹1,623 crore for the September quarter, reflecting the broader industry sentiment.

JSW Steel has a larger presence in flat steel—which fared better than long products—and reported higher volumes, helping it offset price softness during the September quarter.

Tata Steel Ltd has yet to report second-quarter results.

During the quarter, Jindal Steel commissioned a new blast furnace at Angul, doubling the plant’s hot metal capacity to 8.85 million tonnes per annum (mtpa) from 4.25 mtpa. It also began operations of a new 3 mtpa basic oxygen furnace, increasing crude steel capacity at Angul to 9 mtpa and the company’s total capacity to 12.6 mtpa.

With both units now running together, Angul remains on track to reach 12 mtpa, taking Jindal Steel’s overall capacity to 15.6 mtpa by the end of this financial year. Other projects are moving as planned.

Jindal Steel’s stock ended 3.93% higher compared with a 0.18% decline in the benchmark Sensex ahead of the earnings that were released after the market hours.