Metrics raised 1
- Dolvi Phase 3 project cost increased by ~₹2,000 crore (prior cost not specified)
Friday, July 17, 2026 5:30 PM IST
Event Participants
Executives
3 Ashwin Bajaj, Jayant Acharya, Swayam Saurabh
Analysts
13 Alok Deora, Amit Dixit, Amit Murarka, Jashandeep Chadha, Pallav Agarwal, Parthiv Jhonsa, Pinakin Parekh, Rahul Gupta, Raashi Chopra, Rajesh Majumdar, Ritesh Shah, Satyadeep Jain, Sumangal Nevatia
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Crude steel production (consolidated) | 6.59 MTPA | Up 3% YoY; +15% YoY excluding BF-3 shutdown, driven by JVML ramp-up |
| Steel sales (consolidated) | 6.25 MTPA | Up 4% YoY; best-ever Q1 flats up 9% YoY and HR sales up 18% YoY |
| Capacity utilization (India ops) | ~94% | Up from 88% in Q1 FY26, excluding BF-3 which was under shutdown |
| Revenue (consolidated) | ₹47,364 crores | Strong sequential uptick from higher realizations and Q4 contract price spillover into Q1 |
| Adjusted EBITDA | ₹9,373 crores | 20% margin; Middle East conflict added ~$20/tonne to costs |
| PAT | ₹4,696 crores | Strong profitability in the quarter |
| Net debt | ₹45,750 crores | Substantially down from FY25 post BPSL deconsolidation and JFE tranche |
| Leverage | 1.46 | Down QoQ; management comfort target below 2.5 |
| Gearing | 0.42 | Further declined versus last quarter |
| Capex (Q1 FY27) | ₹4,900 crores | FY27 guidance of ₹22,000-24,000 crores intact |
| VASP sales share | 61% of total sales | Up 8% YoY, driven by downstream focus |
| Auto / Renewable sales | +18% / +25% YoY | Best-ever Q1 in both sectors |
| Institutional sales | ~3.7 MTPA | Highest-ever Q1, up 5% YoY |
| Coking coal cost impact | +$17/tonne | Slightly above guidance of $12-15 due to Middle East conflict |
| Indian steel demand growth | 8.3% in Q1 | FY27 outlook of 7-9% growth |
Geographic & Segment Commentary
Indian Operations: Capacity utilization at ~94% (ex-BF-3, which was under shutdown) versus 88% in Q1 FY26, with consolidated production of 6.35 MTPA. Flats volumes were the standout, with best-ever Q1 flats and HR sales, while longs were impacted by labour shortages, diesel availability issues from the Middle East conflict, and retail destocking. VASP sales accounted for 61% of total sales, up 8% YoY, with record Q1 volumes in auto (+18%) and renewable (+25%) sectors.
US Operations (Ohio + Texas): Ohio commissioned vacuum degassing in Q1, enabling production of higher API steel grades, and generated positive EBITDA. Combined US EBITDA was $16 million, with Texas plate & pipe performing better QoQ on operational efficiencies and strong demand.
Italian Operations: Rail mill reported higher EBITDA of EUR7 million despite annual shutdown in May. JSW signed a program agreement with the Italian government for the rail mill modernization project, including a EUR33 million grant.
JSW One Platform: Steel volumes grew 36% YoY; GMV at ₹5,919 crores (up 51% YoY), with credit offerings contributing ₹1,987 crores (up 49% YoY). The platform continued to deliver positive EBITDA in the quarter.
Company-Specific & Strategic Commentary
BPSL Deconsolidation & JFE JV Completion: BPSL steel business de-consolidated from 27 March 2026; second tranche of JFE equity investment of ₹7,875 crores received on 30 June, completing the JV transaction. Net debt of ₹45,750 crores is substantially down from FY25 levels.
BF-3 Expansion (Vijayanagar): Expansion from 3 to 4.5 MTPA completed; blast furnace lit up late June and ramping at ~80%. Incremental volumes expected from Q2 FY27.
GreenEdge Decarbonization: Launched low-emission steel brand with carbon bank of 1 million tonnes of CO2 credits certified by Bureau Veritas. First GreenEdge export order executed; Project SEED delivered cumulative 5 million tonnes CO2 reduction since 2022; scrap utilization up 16% YoY.
Raw Material Security: Won Pissurlem iron ore mine in Goa (May 2026); took over Dugda washery from BCCL (June); placed one major EPC order for MdR Mozambique coking coal project; working to operationalise 13 of 25 iron ore mines. Iron ore captive share currently ~30%.
New Growth Projects: Groundbreaking held 3 July for 1 MTPA EAF and structural mill at Kadapa (targeting FY29 commissioning); adding 0.44 MTPA downstream capacity at Vijayanagar, Khopoli and Rajpura; rail capability being added to 1 MTPA structural mill at Raigarh.
Credit Rating & Deleveraging: Fitch upgraded to BB+ with positive outlook; CARE also upgraded. Management targeting leverage below 2.5 (currently 1.46).
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volumes (Q2 FY27) | Higher than Q1 | BF-3 ramp-up and improved Ohio operations to drive volume growth |
| Coking coal costs (Q2) | +$12-15/tonne | Higher input cost in Q2; recent price softening to benefit Q3 |
| Capex (FY27) | ₹22,000-24,000 crores | Includes growth projects, mining, downstream and cost-saving initiatives |
| India steel demand (FY27) | 7-9% growth | Incremental demand of 12-13 MTPA, supported by public capex, manufacturing and auto |
| Iron ore costs | Trending down; benefit in late Q2/Q3 | Positive for margins in second half of FY27 |
| Leverage | Comfort below 2.5 | Current at 1.46; gearing at 0.42 |
| Dolvi Phase 3 | Commissioning by September 2027 | Part of approved growth pipeline; HR capacity addition |
Risks & Constraints
| Risk | Context |
|---|---|
| Middle East conflict | Supply-chain disruptions, elevated energy and shipping costs (~$20/tonne impact in Q1); gases expected to reverse fully in Q2, but escalation remains a key monitorable. Management sees costs normalising as conflict subsides. |
| Monsoon risk | Below-normal monsoon flagged as key risk to rural demand (four-wheeler, two-wheeler, tractor sales), which has been a demand support pillar; monsoon impact visible in TMT/construction in Q2. |
| Import surge & trade protection | India turned net importer in Q1 despite safeguard duty, with imports from Japan, Russia and China rising; antidumping investigations initiated by government. Management emphasised India has sufficient capacity (225 MTPA) to meet demand, and that 85% of imports are flats. |
| Coking coal price volatility | Costs rose ~$17/tonne in Q1 (above guidance) due to Middle East conflict; Q2 guided +$12-15/tonne, with recent spot softening expected to flow into Q3. |
| TMT/long price correction | Spot TMT prices fell ₹7,000-8,000/tonne from March to June exit due to seasonality and secondary market pressure; impact limited as TMT is only ~10% of JSW volumes, but retail/channel destocking persists. |
| Foreign debt / forex volatility | ~50-55% of debt mix is foreign; rupee depreciation impacted FY26 P&L, but management has hedged and is onshoring part of the debt to reduce P&L volatility. |
Q&A Highlights
Pricing & Demand Outlook
- Question: How do you see steel prices and demand in Q2, given the sharp correction in long steel prices? (Alok Deora, Motilal Oswal)
- Answer: Indian demand grew 8%+ in Q1; inventory rebuild done in Q1 for downstream/plate mill. BF-3 ramp-up will lift Q2 volumes. Long prices are seasonally weak during monsoon; expects normalisation in H2. Flat pricing is reasonably priced with moderate correction. (Jayant Acharya)
Middle East Conflict Cost Impact
- Question: Was there any one-off cost impact from the West Asia crisis, and can you quantify? (Amit Dixit, Goldman Sachs)
- Answer: Impact on fluxes, gas and shipping costs; most should reverse fully this quarter as conflict subsides. Estimated cumulative impact close to $20/tonne of steel. (Swayam Saurabh, CFO)
Coking Coal Self-Sufficiency
- Question: What volumes and cost advantage do you foresee from captive coking coal initiatives over the next 3-4 years? (Sumangal Nevatia, Kotak Securities)
- Answer: Mozambique mine (MdR) to start production mid-2028, targeted at 7 MTPA eventually; Australia equity stake contributes ~2 MTPA; domestic sources target ~3 MTPA (>10% of total feed). By CY'28, ~20% of coking coal from domestic linkages/captive, ~20% from Mozambique, ~10% from Australia - roughly 50% self-sourced. (Swayam Saurabh; Jayant Acharya)
Slurry Pipeline & Iron Ore Logistics
- Question: What volumes and cost savings do you expect from the slurry pipeline? (Sumangal Nevatia)
- Answer: Pipeline capacity is 30 MTPA; targeting ~20 MTPA initial utilisation. Cost saving compared to current rail/road logistics is ~₹1,000 per tonne of iron ore. (Swayam Saurabh)
Deleveraging & Rating Upgrades
- Question: Given BPSL deleveraging, what rating upgrades and interest-cost savings are expected? (Sumangal Nevatia)
- Answer: Fitch upgraded to BB+ with positive outlook; CARE also upgraded. Absolute interest costs should trend lower with lower gross debt. Gradual reduction in borrowing costs expected, though mix matters. (Jayant Acharya)
Dolvi Capex Increase
- Question: Can you elaborate on the ~₹2,000 crore increase in Dolvi project cost? (Amit Dixit, Goldman Sachs)
- Answer: No new downstream facility at Dolvi; cost overrun due to design changes in raw material handling system (double-conveyor structure) and some cost escalation from Middle East conflict. IRR remains strong - capex per million tonnes is still below ₹5,000 crores for 5 MTPA facility. (Jayant Acharya)
Import Scenario & Safeguard Duty
- Question: In a hypothetical scenario where safeguard duties are not extended, how do you see the regulatory landscape? (Ritesh Shah, Investec)
- Answer: Q1 imports rose 22% QoQ, India became net importer again; government has initiated antidumping investigations against Japan, Russia, China. AD investigation is a quasi-legal process that can run parallel to safeguard. Results will emerge in due course. (Jayant Acharya)
JSW Coated Margins
- Question: What is driving the sustained improvement in JSW Coated EBITDA per tonne, and is the ~₹6,000/tonne run rate sustainable? (Amit Murarka, Axis Capital)
- Answer: Capability building in high-grade specialty products, strong branded products (JSW Silveron, Endura), and cost efficiency measures. Sustainable range of ₹5,000-6,000/tonne, but zinc/aluminium price movements (currently elevated due to Middle East conflict) are a variable. (Jayant Acharya)
Spot Price Levels
- Question: Can you give a sense of where spot prices are versus Q1 average? (Raashi Chopra, Citi)
- Answer: Hot-rolled spot is ~₹1,000/tonne lower from start to end of June; TMT spot fell ₹7,000-8,000/tonne from March to June exit; wire rod fell ₹750-1,000/tonne. July may see some further moderation, but flat prices should not correct much further. (Jayant Acharya)
JVML Profitability
- Question: Why has JVML EBITDA per tonne exceeded stand-alone levels after being guided lower? (Satyadeep Jain, Ambit Capital)
- Answer: RH vacuum degassing commissioned - enabled special steel grades; JVML is now supplying special grades to JSW downstream (productive optimisation for a 1,650mm mill); slab exchange with JSW stopped; 2% Karnataka incentive now material on higher volume; smaller/newer BF3 gives lower costs; HSM-3 is highly productive. JVML EBITDA/tonne should remain similar to JSW Steel's integrated facility. (Jayant Acharya)
Key Takeaway
JSW Steel delivered a strong Q1 FY27 with consolidated revenue of ₹47,364 crores, adjusted EBITDA of ₹9,373 crores (20% margin) and PAT of ₹4,696 crores, despite a ~$20/tonne cost impact from the Middle East conflict. Volumes grew 4% YoY to 6.25 MTPA, with record Q1 flats and HR sales, driven by the JVML ramp-up and strong institutional demand (3.7 MTPA, +5% YoY); retail and longs were weaker. Strategically, the BPSL deconsolidation and JFE JV completion (₹7,875 crores received) cut net debt to ₹45,750 crores with leverage at 1.46, while Fitch upgraded JSW to BB+. Growth capex continues with BF-3 ramping (incremental volumes from Q2), Dolvi Phase 3 on track for September 2027, and the Kadapa EAF project under way. Management guides Q2 volumes higher despite coking coal cost pressure, with iron ore and coking coal costs expected to soften into Q3; India demand outlook remains 7-9% for FY27. Watchpoints include the Middle East conflict trajectory, monsoon weakness, import surge post-safeguard expiry (AD investigations initiated), and TMT price volatility, though TMT is only ~10% of JSW volumes.