JSW Steel eyes strong H2 as domestic demand and policy support bolster outlook

After reporting robust numbers for the second quarter despite a challenging global environment, JSW Steel said it expects a strong second half for the company on the back of 8-9% growth in domestic demand for steel in FY26.

“While exports need to be monitored due to tariff actions by various countries, we remain optimistic about a strong second half, backed by improving steel prices and higher production volumes,” Jayant Acharya, joint managing director and chief executive officer (CEO) of JSW Steel, said in a post-earnings interaction with analysts.

On Friday, India’s largest steelmaker by domestic capacity reported a more than threefold jump in consolidated net profit for the September quarter, powered by higher volumes and lower input costs that offset weaker metal prices.

The company posted a consolidated net profit of ₹1,623 crore for the quarter ended 30 September 2025, up sharply from ₹439 crore a year earlier. Still, it missed the ₹1,766 crore projection of 23 analysts polled by Bloomberg.

Acharya acknowledged that prices have been softer during the seasonally weak quarter, but anticipated better times ahead. “Since September, after the monsoon, we’ve seen prices stabilize and expect them to improve in November–December,” he said.

Revenue from operations rose 14% to ₹45,152 crore, while adjusted Ebitda jumped 39% to ₹7,849 crore, “driven primarily by higher volumes and lower iron ore, coking coal and power costs, partly offset by a decrease in realizations”, the steelmaker said in a statement on Friday.

Reported Ebitda increased 30% to ₹7,115 crore, excluding forex and intercompany adjustments. Ebitda refers to earnings before interest, tax, depreciation and amortization.

Ravi Sodah, metals and mining analyst at Elara Capital, said the company’s second-quarter results met expectations, with a surge in sales volumes helping offset weaker prices and support earnings.

The steelmaker’s sales also rose 20% to 7.34 million tonnes, compared to the same period a year ago, with capacity utilisation of 92% in India. Additionally, exports jumped 89% year-on-year and contributed 10% to sales from the Indian operations in the second quarter.

In Q2 FY26, the company produced 7.90 million tonnes of crude steel, 17% more than last year. This growth was led by the Dolvi plant running at full capacity after its planned maintenance in Q1, along with the ramp-up of the JSW Vijayanagar Metallics Limited, and Bhushan Power and Steel Ltd expansions.

The company’s consolidated capex spend during Q2 FY26 was ₹3,135 crore, and ₹6,535 crore during the first half of FY26. It expects to spend ₹20,000 crore during the entire fiscal year.

JSW Steel is expected to reach a capacity of 41.9 million tonnes by FY27, and with the addition of a 1 MTPA electric arc furnace plant in Kadapa, Andhra Pradesh, planned for completion by end-FY29, production will rise to 42.9 million tonnes, Acharya added. The company has a 50 million tonnes capacity target by 2030.

The steelmaker’s stock on the BSE slipped a marginal 0.77% to ₹1,162.80 on Friday.

Exports, imports and policy context

Since FY26 began, China’s HRC prices have risen 4.5% in rupee terms, while domestic prices fell 5% despite a 12% safeguard duty, according to an Elara Capital report of October. China’s HRC prices act as a lead indicator for global steel prices.

The temporary safeguard duty was imposed in April to shield local producers from cheap Chinese imports, and is expected to expire this month.

Acharya said the finance ministry’s approval for a three-year safeguard duty is expected by November. The Directorate General of Trade Remedies (DGTR) has recommended a staggered rate on imports of hot-rolled flat products of non-alloy and other alloy steel—12% for the first year, 11.5% for second year, and 11% for third year.

Acharya highlighted that while on an absolute basis imports have come down, they have again shown an increase in the last two months due to tariff headwinds that are resulting in some spillover for steel looking for a market, “and India becomes a natural choice”.

“While our safeguard duties of 12% have been helpful in the first quarter, I think part of that is already eroded,” he added.

While the company remains cautious about the global outlook for 2026, given ongoing geopolitical uncertainty and high tariffs despite some recent trade agreements easing pressure, it said domestic economic momentum remains “broadly positive”.

The recent GST reforms are expected to provide a significant boost to consumption, especially in segments such as automobiles and consumer durables. While Q2 trends were impacted by deferred purchases ahead of the revision of GST rates, “demand is expected to rebound strongly in H2”, the company said.

On the carbon tax in Europe, Acharya said the company is monitoring CBAM policies, though the detailed guidelines are still awaited. He highlighted that over 90% of the company’s volumes are in the domestic market, which has helped moderate its export focus.

“Our exposure to Europe is limited to around 2–3% of a 30–32 million tonne capacity, so we should be able to find alternative markets for these volumes,” he said. “However, we will continue to keep a close watch on how CBAM and the proposed European duty structure evolve.”

Further, JSW Steel said it is streamlining its US operations by combining all activities under a single holding, JSW Steel (Netherlands) B.V., pending regulatory approvals. This consolidation of the Baytown and Acero business units is expected to improve both financial and operational efficiency.