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Informist, Tuesday, Oct. 14, 2025

 

By Rajesh Gajra

 

NEW DELHI - JSW Steel Ltd., the largest steel manufacturer in the country with an installed capacity of nearly 36 million tonnes per year, is seen delivering strong earnings on a year-on-year basis in the September quarter on the back of good volume growth, an uptick in pricing, and lower or benign input costs. The company's non-operating metrics such as finance cost and depreciation are also likely to be flat, aiding the bottom line growth, data from brokerage Motilal Oswal Financial Services' earnings preview report shows.

 

The company is likely to report a consolidated net profit of INR 17.2 billion for the September quarter, up 120% on year but down 21% over the trailing quarter, according to the average of the estimates of nine brokerages. Excluding an outlier net profit estimate of INR 26.3 billion by Prabhudas Lilladher, the highest among all brokerages, the net profit is seen up 105% on year and down 27% on quarter at INR 16 billion. The lowest net profit estimate is INR 12.2 billion by Nuvama Wealth Management.

 

JSW Steel's consolidated net sales will likely be INR 445.6 billion, up 12% on year and 3.3% sequentially. The net sales estimates range from a low of INR 408.9 billion by Nuvama to a high of INR 468 billion by Prabhudas Lilladher.

 

JSW Steel Friday reported crude steel production volume numbers for the September quarter, which showed sharp growth of 16.7% on year in consolidated steel production at 7.90 million tonnes, led by a 15.5% rise in India steel production at 7.66 million tonnes. The production volume at JSW Steel's US factory in Ohio was also sharply up at 240,000 tonnes in the September quarter, against 140,000 tonnes in the year-ago quarter.

 

The company reported 92?pacity utilisation for the September quarter, indicating demand momentum and likely build-up of inventory by the company in expectation of a rise in offtake in the December quarter. The strong production volume growth is likely to translate into high double-digit sales volume growth for the company in the September quarter, helping both the top line and bottom line growth.

 

Sequentially, the consolidated crude steel production increased nearly 9% in the quarter. But analysts see the sequential earnings performance of JSW Steel being hit by weak demand, muted net sales realisation, and higher coking coal prices, which rose due to supply constraints arising from heavy rainfall during the quarter.

 

Sales volume growth will be the key driver for JSW Steel's earnings in the September quarter. The sales volume from JSW Steel's India units, which make up for a bulk of the consolidated volume, is seen up significantly on the back of higher domestic demand compared to the year ago quarter. Three brokerages - Kotak Securities, Anand Rathi Share and Stock Brokers, and Motilal Oswal Financial - estimate the company's sales volume growth at nearly 18% for the September quarter.

 

The strong sales volume growth is, however, seen getting partly offset by lower net sales realisation. Some brokerages, including Anand Rathi, estimate the net sales realisation will decline over 4% on year, while others, including Kotak, estimate a lower decline of less than 1%. In the September quarter, steel prices moved up on a year-on-year basis but only moderately.

 

JSW Steel's operating profit performance in the September quarter would have substantially benefitted from a double-digit fall in coking coal prices compared to the same quarter a year ago. Iron ore costs, however, went up but only slightly. Average coking coal prices were $199.3 per tonne in the September quarter, down sharply from $228 per tonne in the year-ago quarter, while iron prices rose to $97.3 per tonne from $94.5 per tonne, data from Anand Rathi's preview report showed. The earnings before interest, tax, depreciation, and amortisation of the company are seen at INR 67.9 billion, according to the average of estimates by eight brokerages.

 

There is no consensus among analysts on the impact of the overall fall in input costs and higher revenue on JSW Steel's EBITDA per tonne. While Motilal Oswal expects it to be up just 0.4% on year, Kotak estimates a much higher rise of nearly 11% and IDBI Capital sees it rising nearly 13%.

 

Besides better operating profit, JSW Steel's bottom line growth will likely be aided by other factors. Motilal Oswal expects both interest costs and depreciation expense of JSW Steel to be flattish on a year-on-year basis in the September quarter. The brokerage has estimated interest costs of JSW Steel to be flat at INR 21.3 billion and depreciation expense to move up slightly to INR 23.3 billion from 22.7 billion. Together, these two metrics account for a little over 10% of the net sales.

 

The company will detail its September quarter financial results on Friday. Investors will watch out for the management's commentary on the outlook for demand for the rest of the current financial year, the recent uptick in coking coal prices, and capital expenditure plans. Motilal Oswal includes outlook on steel prices and capex timelines as additional factors to track for investors.

 

Of the 18 brokerage reports on JSW Steel available with Informist, 11 have a 'Buy' call on the stock at an average target price of INR 1,155, while two have a 'Hold' recommendation, and five have a 'Sell' call at an average target price of INR 928. Monday, shares of JSW Steel closed at INR 1,161.40 on the National Stock Exchange.

 

The stock is currently up around 13% from the June quarter earnings announcement date of Jul. 18. In the June quarter, the company had reported a consolidated net profit of INR 21.84 billion, up 160% on year, amid a marginal revenue increase of 0.5% on year at INR 431.47 billion.

 

During the September quarter, JSW Steel got a major relief from the Supreme Court which, on Sept. 26, gave its final ruling on the Bhushan Power and Steel Ltd. matter in favour of the company. JSW Steel had paid INR 193.5 billion towards the acquisition of 83.28% stake in Bhushan Power and Steel under insolvency proceedings around four years ago. In May, the Supreme Court had, in appeals against the resolution plan, ruled against JSW Steel and ordered the liquidation of Bhushan Steel.

 

The company had then filed a review petition against this order in the Supreme Court, and certain operational creditors had also filed a review petition. Now, the company has secured the court verdict in its favour. Brokerage Prabhudas Lilladher said this recent Supreme Court decision "has helped clear a lingering overhang".

 

Following are the September quarter earnings estimates for JSW Steel from nine brokerage firms in descending order of estimate of net profit:

 

Brokerage	Net sales	Net profit	EBITDA
	(In INR million)
Prabhudas Lilladher Pvt Ltd	468,000	26,300	69,700
YES Securities (India) Ltd	455,851	18,661	70,033
Kotak Institutional Equities	460,447	18,318	71,995
Emkay Global Financial Services Ltd	453,774	16,930	70,476
IDBI Capital Market Services Ltd	423,460	16,458	68,653
Anand Rathi Share and Stock Brokers Ltd	445,709	16,114	--
Motilal Oswal Financial Services Ltd	430,607	15,483	64,387
JM Financial Institutional Securities Pvt Ltd	464,000	14,000	65,000
Nuvama Wealth Management Ltd	408,936	12,178	63,074
Average	445,643	17,160	67,915

 

End

 

Edited by Avishek Dutta

 

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