Jindal Steel & Power Ltd (JSPL) saw its shares decline 10% to ₹756.05 during the trading session after the company reported a 51% year-on-year (YoY) drop in consolidated net profit for Q3 FY25 to ₹951 crore. The decline was attributed to weaker steel pricing, higher iron ore costs, and a challenging domestic steel market, where India remained a net importer of steel.
Revenue and EBITDA performance
JSPL’s consolidated revenue rose marginally YoY to ₹11,751 crore, reflecting slight improvements in production and sales volume. However, EBITDA fell sharply by 24% YoY to ₹2,133 crore, impacted by higher raw material costs. The company reported an EBITDA per tonne of ₹11,209, lower sequentially, highlighting ongoing margin pressures.
Production and sales details
The company’s steel production for the quarter stood at 1.99 million tonnes, up 2.5% YoY, while steel sales rose 5% YoY to 1.90 million tonnes. Long products, widely used in infrastructure projects, accounted for 59% of total sales in Q3.
Capex plans and expansion
JSPL announced an aggressive capital expenditure plan of ₹15,000 crore, to be utilized by FY28 for value-added product development and efficiency improvements. The key investments include:
- A 400,000 tonnes per annum cold rolling mill
- A 200,000 tonnes per annum galvanizing line
- A 200,000 tonnes per annum color coating line
Debt and expansion progress
The company’s net debt increased to ₹13,551 crore as of December 31, 2024, up from ₹12,464 crore at the end of September. During Q3, JSPL spent ₹2,857 crore on capital expenditure, primarily for its Angul facility, where the 6 million tonnes per annum steel expansion is in the final stages of commissioning. The full ramp-up is expected by FY26.
Brokerage updates and fresh capex concerns
Citi maintained a ‘Sell’ rating on JSPL with a target price of ₹765, citing concerns over higher costs and a steep drop in EBITDA per tonne to ₹10,700 from ₹15,000 last year. The brokerage noted that Q3 standalone adjusted EBITDA rose 6% QoQ, driven by 3% volume growth and 1% higher realizations, but was partially offset by rising costs.
ICICI Securities also flagged concerns over JSPL’s fresh capex announcement of ₹23,400 crore over FY26-FY28, which includes ₹7,380 crore carried forward from ongoing expansion. Management stated that the capex is progressing as scheduled with no cost overruns, but new investments worth ₹5,720 crore will go towards enhancing projects such as a 200 ktpa galvanizing and color-coated line and downstream capacity at Raigarh. Additionally, ₹4,500 crore will be spent on logistics and infrastructure. ICICI Securities highlighted that this additional capex comes at a time of weak steel spreads, which may continue to weigh on investor sentiment.
Stock performance and key metrics
JSPL’s stock plunged to ₹756.05, with an intraday high of ₹785.05 and a low of ₹756.05. The stock’s 52-week range stands at ₹708.70 – ₹1,097.00. The company’s market capitalization is ₹765.14 billion, with a P/E ratio of 15.19 and a dividend yield of 0.26%.
Management commentary
Despite the weak earnings, JSPL’s management remains optimistic about future growth, emphasizing that its long-product focus and strategic capex investments will help boost sales realization and EBITDA margins. The company expects strong demand for infrastructure-related products and believes that its long-term investments in value-added products will solidify its position as a key supplier to major projects in India.
Disclaimer
The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions
