JSW Steel Q3 preview: Import curbs lift stock, but earnings seen under pressure
JSW Steel shares rose 5.7% since 30 December, outperforming the benchmark Sensex. But this may have come a quarter too late, as the domestic market leader saw the prices of its product fall to an absolute low during the October-December quarter
Mumbai: JSW Steel stock has surged in the past three weeks in tandem with domestic steel prices after the government put a levy on cheaper imports.
The steelmaker’s shares rose 5.7% since 30 December, outperforming the benchmark Sensex, which fell 3.3% over the same period. But this may have come a quarter too late, as the domestic market leader saw the prices of its product fall to an absolute low during the October-December quarter, rivalled only by the abnormal lows seen during the covid-19 pandemic.
Analysts estimate that lower iron ore costs will partly offset the impact of weaker steel prices and higher coking coal prices. Even so, the steelmaker’s net profit is expected to fall sequentially for the second quarter in a row, according estimates of brokerage firms Yes Securities and Elara Securities.
What's reassuring the company's investors is that the Centre's decision to levy a 12% safeguard duty for three years on 30 December gave steelmakers the confidence to raise prices twice within two weeks of the announcement.
Even as pricing remains in focus, regulatory risks have resurfaced. India’s competition watchdog has found that market leaders JSW Steel, Tata Steel, state-run SAIL and 25 other firms colluded on steel selling prices, according to a Reuters report citing a confidential document, potentially exposing the companies and their executives to hefty fines.
With JSW Steel set to announce its December quarter earnings on Friday, management is also likely to face tough questions on the allegations of price collusion.
Beyond these immediate headwinds, the company continues to pursue an aggressive capacity-expansion strategy anchored in India’s long-term steel demand.
Besides being on track to reach 51 million tonnes per annum capacity, the steelmaker will add another 5.5 million tonnes through its newly formed joint venture with Japanese steelmaker, which was earlier a wholly owned subsidiary of the company called Bhusan Power and Steel.
The company has also stepped up efforts to tap advanced technology from global steelmakers through joint ventures. In August last year, JSW Steel announced a partnership with South Korea’s Posco Holdings to set up a 6 million tonnes per annum (MTPA) steel plant.
Three months later, it unveiled another joint venture with Japan’s JFE Steel Corp, under which the steel assets of Bhushan Power & Steel Ltd (BPSL) will be transferred into a new 50:50 venture.
Cleverly, JSW Steel has also managed to park its debt through the Bhusan transaction. The Bhushan deal has also materially strengthened JSW Steel’s balance sheet. As of the July–September 2025 quarter, the company’s total debt stood at ₹79,153 crore. Through the transaction, around ₹5,000 crore of BPSL’s debt will be removed from JSW Steel’s books.
In addition, JSW Steel will receive ₹32,250 crore in cash for the sale of BPSL’s steel assets after adjusting for expenses. To fund part of this payment, BPSL and JSW Sambalpur Steel will raise a little over ₹16,000 crore in new loans.
Overall, the deal allows JSW Steel to move about ₹20,000 crore of debt off its balance sheet, helping it cut its total debt by almost half.
Against this backdrop, investors will look to management for clarity on whether any fresh debt will be raised to fund the 51 million tonne capacity expansion.
Amid this, Mint lists down three key points to focus on in the company's third-quarter results:
Revenue and profitability
Analysts at Ambit Institutional Equities estimate that JSW Steel’s revenue in the December quarter will be ₹43,194 crore, up 4% year-on-year but down 4% sequentially, while Ebitda is seen at ₹6,512 crore with margins of 15%, reflecting an 8% quarter-on-quarter decline as lower steel realisations and higher coking coal costs weigh on profitability, partly offset by softer iron ore prices.
JSW Steel’s December-quarter profit is estimated to be at ₹1,288 crore according to Elara Securities, which marks a sequential decline of about 21% or ₹335 crore from the September quarter, even as it rises about 63% year-on-year, or roughly ₹499 crore, from the year-ago period. The adverse spread between realization and input cost is likely to weigh on profitability, wrote Ravi Sodah, metals and mining analyst at Elara Securities, in his report.
Demand and pricing
A weak monsoon and oversupply weighed on steel prices in the September quarter, with the pressure continuing into the December quarter. Investors and analysts will now look for management commentary on how much room is left for further price increases after the announcement of safeguard duty and resumption of construction activity, and whether the upcoming Budget could deliver an infrastructure push that supports steel demand, narrowing the gap between demand and supply.
Steel prices remain under pressure in Q3FY26, led by weakness in flat products amid supply outpacing demand, according to an Elara Securities January report.
According to a steel ministry document reviewed by Mint, steel consumption grew 6.8% during April–December 2025, nearly half the 11% growth recorded a year earlier, however, rose 10% during the period, compared with 4% growth in April–December 2024.
Exports and carbon tax
Exports contributed 10% of total revenue in the September quarter, but with the European Union’s carbon tax taking effect from 1 January, analysts are monitoring whether export contributions come under pressure in the December quarter and what the outlook will be for the coming quarters.
Investors may also seek clarity on the carbon border adjustment mechanism, the European Union's policy to put a fair price on carbon from imported goods, as it remains unclear what the impact of the carbon duty is when the goods reach the border.
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