Event Participants
Executives
9
Sunil Agarwal, Biju Nair, Damodar Mittal, Debojyoti Roy, Rajiv Kumar, Roopali Mehra, Sandeep Modi, V.R. Sharma, Vishal Chandak
Analysts
9
Alok Deora, Amit Dixit, Amit Murarka, Jashandeep Singh Chadha, Pathanjali Srinivasan, Rahul Gupta, Rajesh Ravi, Ritesh Shah, Sumangal Nevatia
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Sales Volume | ~15% QoQ decline | Decline driven by planned maintenance shutdown (BOF refractory life, ~9,000–10,000 heats per vessel); ~300,000 tonnes hot metal loss expected to be recovered in subsequent quarters |
| Consolidated Revenue | ~8% QoQ decline | Volume decline partly offset by ₹7,500/tonne ASP improvement on stronger steel prices and richer product mix |
| Average Selling Price (ASP) | +₹7,500/tonne QoQ | Flats +₹7,000/tonne, longs +₹4,500/tonne QoQ; specialty products (rails, rounds, quenched & tempered plates) held prices firm |
| Value-Added Product Share | 66% of sales | Up from 61% in Q4 FY26; expected to rise further as downstream facilities (CRM, BOF 3, HSM) ramp up |
| Adjusted EBITDA | ₹2,667 crore | Resilient despite 15% volume decline; supported by mix, higher realization, and cost discipline |
| Adjusted EBITDA per tonne | ₹1,197 | Transcript notes QoQ improvement of ₹1,843/tonne, driven by higher ASP, partly offset by +$23/tonne coking coal cost and lower fixed-cost absorption |
| Consolidated PAT | ₹854 crore | Impacted by higher depreciation and finance costs following capitalization of expansion assets in Q4 FY26 |
| Finance Cost (P&L) | ₹548 crore | First full quarter of interest recognition on newly capitalized assets: 1,050 MW captive power plant, BOF 3, CRM |
| Coking Coal Consumption Cost | +$23/tonne QoQ | In line with earlier guidance of $20–25/tonne increase; Middle East conflict contributed ~$12–13/tonne |
| Net Debt | ₹15,927 crore | Net debt/EBITDA at 1.71x |
| Net Debt/EBITDA | 1.71x | Management confident of achieving below 1.5x stated threshold during Q2 FY27 |
| CapEx | ~₹2,000 crore in Q1 | Against FY27 plan of ~₹8,500 crore; cumulative expansion spend at ₹37,457 crore of announced ₹47,043 crore |
| Inventory | <10–11 days of production | Described as lean and best-in-class |
| Captive Coal Mix | ~50% | Expected to rise with Utkal B1 ramp-up and Utkal B2 commissioning |
| Iron Ore Backward Integration | 28% (Q1) | Up from 16% in Q4 FY26; targeting ~40% exit basis for FY27 |
| Blast Furnace #2 (Angul) | 11,000 tpd | vs 13,000 tpd rated capacity; target 12,000 tpd in September, 13,000 tpd (100%) by December |
| Blast Furnace #1 (Angul) | 11,000 tpd | Operating above 10,000 tpd nameplate capacity |
Geographic & Segment Commentary
Flat Products (HRC, Plates, Specialty Plates): HRC prices increased sequentially and remained firm through Q1, with current index only ~₹800/tonne below Q1 average. New 5.5 MT state-of-the-art hot strip mill being utilized for value-added grades rather than commodity coils. Plate production at ~2 MT/year, planned to rise to 2.5 MT. Defense-grade specialty plates (submarines, warships, oxygen/nitrogen/hydrogen storage) being produced; government import restrictions on quenched and tempered plates support domestic realization. Commodity HRC remains exposed to import competition via advance licenses, but management states value-added mix provides insulation.
Long Products (TMT, Rebars, Rounds, Rails): TMT prices opened strong in Q1 but declined ~₹8,000/tonne from Q1 average on seasonal monsoon weakness in construction; expected recovery from end-August. JSL supplies hardened rails to 18–19 of 22 metro rail projects in India, positioned as ~100% supplier of hardened rails. Round billets (used for rail wheels and seamless pipes/tubes) produced by only one other company in India. Sheet piles and heavy-section angle irons are sole-source domestic products; portfolio of nine product segments allows volume redirection when one segment weakens.
Company-Specific & Strategic Commentary
New Leadership Team: MD V.R. Sharma (rejoined after 2019–22 tenure), COO Rajiv Kumar (ex-Tata Steel, ex-Vedanta CEO – Aluminum), CFO Sandeep Modi (ex-Hindustan Zinc, 20+ years Vedanta Group), CHRO Pasricha (ex-IndiGo, Airtel), plus EDs Debojyoti Roy (Raigarh, ex-Tata Steel) and Biju Nair (Angul, ex-ArcelorMittal). Management emphasized a stable 1,800–2,000-strong upper-middle management layer driving operations.
Capacity Utilization Drive: Installed crude steel capacity of 15.6 MT; FY27 sales guided at 10.5–11 MT (blended internally to 11.5–12.5 MT). Metallics gap of ~3.5 MT to be bridged via HBI, DRI, and scrap purchases. Combined Angul BF output target of 24,000 tpd hot metal; total steel-making goal of 27,000 tpd post-monsoon, ultimately 30,000 tpd.
Cost Reduction Program: Targeting ≥₹1,000/tonne reduction from controllable factors (yield improvement, consumption efficiency, wastage avoidance). Slurry pipeline (18–20 MT capacity, longest in India) expected to deliver ₹700/tonne logistics savings from Q2; commissioning targeted first half August. Captive coal ~50% with Utkal B1/B2 upside; iron ore backward integration to ~40% exit FY27. Jindal Port commenced operations (two vessels unloaded, one loading).
Value-Engineered Product Strategy: Explicit commitment to avoid commodity capacity additions; CapEx of ₹8,000–10,000 crore/year directed only at value-added products. HSM goal: 4 MT of 6 MT capacity as true value-added steel. Product-wise EBITDA ranges ₹7,000–25,000/tonne; target to convert ~1.5–2 MT of low-EBITDA volume to high-EBITDA grades.
Earn & Invest Capital Framework: Expansion (including Patratu, Jharkhand MOU – 2.5–2.7 MT blast furnace feeding existing 2–2.2 MT rolling mills) contingent on iron ore allocation and funded only from internal accruals; no balance-sheet leverage for commodity projects. Bankers renegotiated for lowest borrowing rates.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY27 Sales Volume | 10.5–11 MT (maintained) | Q1 volume loss of ~300,000 tonnes hot metal to be recovered over subsequent quarters; run-rate to increase |
| Net Debt/EBITDA | Below 1.5x in Q2 FY27 | Supported by ramp-up of new facilities and continued cash generation |
| BF #2 Ramp-up | 12,000 tpd by September; 13,000 tpd (100%) by December | Monsoon constraints (grid failure, water management) receding from mid-August; team targets committed |
| Slurry Pipeline | Commissioning in first half August (tentative) | End-to-end laid, pigging trials underway; weather could delay to end-August |
| Coking Coal Cost | +$12–15/tonne expected | China demand factor is swing variable; blending flexibility to mitigate |
| Cost Reduction | ≥₹1,000/tonne from controllable factors | Yield, consumption, wastage focus under COO Rajiv Kumar; slurry pipeline contributes ₹700/tonne |
| Iron Ore Backward Integration | ~40% exit basis FY27 | Up from 28% in Q1; strategic cost buffer |
| Annual CapEx Run-Rate | ₹8,000–10,000 crore | Value-added products only; earn-and-invest discipline, no commodity expansion |
| Steel Demand | Recovery from end-August | Monsoon receding, government infrastructure capex and bank construction lending to drive rebound; RBI FY27 GDP growth at 6.6% |
| ROCE | 18–20% target (capital allocation framework) | Implied by expansion project returns per management |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical Conflict Impact | Russia-Ukraine war (four years) and US/Israel-Iran conflict have raised fuel prices and suppressed global steel consumption; Middle East conflict added ~$12–13/tonne to costs in Q1. Management sees peace as the trigger for a global steel demand recovery. |
| Coking Coal Price Pressure | +$23/tonne in Q1 with a further $12–15 expected; India's blast-furnace-heavy steelmaking mix and recent coke imports from Indonesia raise input cost exposure. China's steel demand/capacity decisions remain the key uncertainty. |
| Monsoon / Weather Disruptions | Heavy rains (>100 mm in 1–2 hours) disrupted water management and electrical grid at Angul; monsoon weakens TMT demand (~₹8,000/tonne index correction) and could delay slurry pipeline commissioning. |
| Import Competition in Commodity HRC | Flat commodity coils imported under advance licenses create price pressure, though management asserts the value-added mix insulates JSL. Government ban on quenched/tempered plate imports is a supportive counterweight. |
| China Oversupply Spillover | China capacity reduction of ~50–60 MT trails demand decline of ~100 MT, leaving a surplus in international markets; risk of influx into India until global demand normalizes. |
| Uncontrollable Input Pricing | Iron ore prices set by NMDC/OMC and global energy/coal markets are outside management control; cost program is limited to controllable levers (yield, consumption, logistics, blending). |
| Maintenance Shutdown Frequency | BOF vessel refractory life (~9,000–10,000 heats) forced a Q1 shutdown causing 15% volume decline and ~₹2,000/tonne operating leverage loss; future shutdowns tied to heat counts and cannot be indefinitely deferred without safety risk. |
Q&A Highlights
Strategic Priorities & Expansion Plans
- Question: With the new leadership, what are your top 3–4 focus areas, and are there thoughts on further Angul crude steel expansion? (Amit Dixit, Goldman Sachs)
- Answer: Focus is on 100% capacity utilization of 15.6 MT installed capacity, producing only value-added products, and bridging the metallics gap (HBI, DRI, scrap) to move from ~11.5 MT to 12.5–13 MT. Expansion will follow the "earn and invest" mantra only — ₹8,000–10,000 crore/year CapEx directed exclusively at value-engineered products; no commodity capacity additions and no balance-sheet borrowing for expansion. (V.R. Sharma)
Blast Furnace Ramp-up & Slurry Pipeline
- Question: What is current BF utilization and where does the slurry pipeline stand? (Amit Dixit, Goldman Sachs)
- Answer: Angul BF #2 (13,000 tpd rated) is at 11,000 tpd, targeting 12,000 in September and 13,000 by December; BF #1 is running at 11,000 tpd vs 10,000 rated. Raigarh is at 100% (6,800 tpd combined). Combined steel-making target is 27,000 tpd post-monsoon, ultimately 30,000 tpd. Slurry pipeline is laid end-to-end with trials ongoing; commissioning targeted first half August (18–20 MT capacity, ₹700/tonne savings). (V.R. Sharma)
Pricing & Demand Outlook
- Question: How do current prices compare with Q1/Q4 averages, and where are prices heading in Q2 given the sharp longs correction? (Alok Deora, Motilal Oswal)
- Answer: HRC is ~₹800/tonne lower than Q1 FY27; TMT is ~₹8,000/tonne lower — seasonal monsoon weakness that historically recovers. JSL's nine-product portfolio allows volume redirection when one segment is weak; specialty products (rails, rounds, structural angles, plates, QT) maintained pricing. (Roopali Mehra / V.R. Sharma)
Coking Coal Cost & FY27 Volume Guidance
- Question: What is the coking coal cost assumption for Q2, and is FY27 volume guidance maintained? (Alok Deora, Motilal Oswal)
- Answer: Expect ~$15/tonne (₹1,500) increase, subject to the China demand factor; blending flexibility will mitigate. FY27 sales guidance of 10.5–11 MT is maintained; Q1's 300,000-tonne hot metal loss from refractory-driven shutdown will be recovered in subsequent quarters. (V.R. Sharma)
Q1 Cost Increase Breakdown
- Question: What explains the ~₹5,500/tonne QoQ cost increase, and how should costs shape up next quarter? (Sumangal Nevatia, Kotak Securities)
- Answer: Breakdown: iron-bearing cost +₹500/tonne; Middle East conflict ~$12–13/tonne; coking coal +$23/tonne; operating leverage loss of ~₹2,000/tonne from the maintenance shutdown. Q2 should see better cost structure via volume recovery (no shutdown) and scale economies, though Middle East impact remains watchful. (Sandeep Modi)
Cost Savings Quantification & Interest Costs
- Question: What quantified cost savings can we expect over the next two years (slurry pipeline, coal mines, DRI, port), and what interest cost savings are anticipated? (Rahul Gupta, Morgan Stanley / Ritesh Shah, Investec)
- Answer: Slurry pipeline delivers ₹700/tonne from Q2; captive coal ~50% will rise with Utkal B1/B2; Jindal Port has started operations (two vessels unloaded, one loading); iron ore backward integration at 28% vs 16% last quarter, targeting ~40% exit. Controllable cost reduction of at least ₹1,000/tonne is achievable (yield, consumption, wastage); input costs like coal and NMDC/OMC-set iron ore remain uncontrollable. (V.R. Sharma / Sandeep Modi)
Q2 Margin Outlook
- Question: With longs down ₹8,000 and flats down ₹1,000, will cost reductions largely cover realization losses, keeping margins flattish around ₹12,000? (Rajesh Ravi, HDFC Securities)
- Answer: Input costs adjust with a 4–6 week lag when prices fall; monsoon pressure lasts only until end-August. With the ₹1,000/tonne cost-reduction program, the company expects to be a net gainer rather than losing margin. (V.R. Sharma)
Value-Added Mix vs. Unit Profitability
- Question: Value-added and flats share keep rising, yet unit profitability doesn't reflect it — why? (Pathanjali Srinivasan, Sundaram Mutual)
- Answer: Product-wise EBITDA is internal and ranges from ₹7,000 to ₹25,000/tonne depending on product. Currently ~50% of volumes are high-EBITDA products; the plan is to shift another ~1.5–2 MT (30% of the low-EBITDA basket) into high-EBITDA value-engineered grades. HSM target: 4 MT of 6 MT capacity as true value-added steel, not commodity. (V.R. Sharma)
Patratu MOU & Capital Allocation
- Question: How should the Patratu/Jharkhand MOU be viewed against the stated capital allocation framework? (Ritesh Shah, Investec)
- Answer: Patratu has 300+ acres and two rolling mills (2–2.2 MT capacity) already operating since 2010. The MOU covers only backward integration — a 2.5–2.7 MT blast furnace — contingent on government iron ore allocation (Jeraldaburu block). No investment is committed until conditions are met; funding will follow the earn-and-invest principle with no balance-sheet burden. (V.R. Sharma)
Management Stability
- Question: Should investors be concerned about frequent senior management changes affecting strategic continuity? (Jashandeep Singh Chadha, Nomura)
- Answer: Movement at the top ~20 positions is often personal decisions; the 1,800–2,000-strong upper-middle management layer is stable and drives the organization. The board has inducted eight new senior faces (CFO, CHRO, COO, plant heads) with deep industry backgrounds to strengthen the team; the objective is long-term stability. (V.R. Sharma)
Key Takeaway
Jindal Steel delivered a resilient Q1 FY27 despite a planned BOF refractory shutdown: adjusted EBITDA of ₹2,667 crore with per-tonne EBITDA at ₹1,197, as a 15% sequential volume decline was offset by ₹7,500/tonne ASP gains and value-added product share rising to 66% from 61%. The newly assembled leadership team under MD V.R. Sharma has committed to three levers: reaching 100% capacity utilization (15.6 MT installed; FY27 sales guided at 10.5–11 MT with BF #2 hitting 13,000 tpd by December), driving ≥₹1,000/tonne cost reduction (slurry pipeline ₹700/tonne, captive coal 50%, iron ore backward integration toward 40% exit), and expanding only via earn-and-invest into value-engineered products. Net debt/EBITDA at 1.71x is expected below 1.5x in Q2 FY27. Watch points include coking coal cost trajectory (+$12–15/tonne), monsoon-impacted longs pricing (₹8,000 correction), China's oversupply spillover, and execution of the slurry pipeline commissioning slated for August.
Transcript incomplete — management closing remarks and some Q&A portions condensed; no guidance on segment-wise revenue split or detailed balance-sheet line items were provided in the call.