Source: Company website
| Photo Credit:
BL companies
Jindal Steel has commissioned two plants in H1FY26 and expects to commission a third facility by FY26-end. The recent additions should drive the established capacity from 9.6 mtpa (million tonnes per annum) to 15.6 mtpa by FY26. The company is expected to increase output significantly from the current 2 mtpa per quarter in the next two years. The operating and financial leverage, post commercialisation, associated with the scale-up will be the next phase of growth for the company.
We recommend accumulating the stock, which is trading at premium valuation of 7.7 times one-year forward EV/EBITDA. We earlier recommended accumulating the stock in October 2023 when the expansion plans had been announced and the stock has delivered 55 per cent returns since then.
Revenue growth
Jindal Steel has commissioned a 4.6-mtpa capacity blast furnace at Angul in September 2025. The facility has also produced its first batch of steel. At the same location, the company has also commissioned a 3-mtpa basic oxygen furnace steel plant in September. It will also be commissioning a 3-mtpa steel melting shop by the fiscal-year end. The overall crude steel capacity should increase from 9.6 mtpa in FY23 to 15.6 mtpa – a 60 per cent growth.
The company guidance, though, is still conservative, indicating a gradual ramp-up in utilisation. It reported steel production/sales of 8.2/7.8 mtpa in the last 12 months. Jindal Steel has guided for production of 9-10 mtpa and sales of 8.5-9 mtpa. Though this indicates a 10-15 per cent growth in production/sales, the installed nameplate capacity is far higher.
While volume outlook is strong, the price outlook for the steel industry continues to be weak. Owing to excessive Chinese imports, which are at cost break-even prices, the steel prices continue to be weak the world over. Several countries have imposed trade barriers, including India, against Chinese and Vietnamese steel imports. This has arrested the decline, but prospects of steel price growth are still bleak.
Jindal Steel can utilise value-added product mix to improve pricing. The company has reported an industry-leading 70+ per cent value-added product mix in Q2FY26. The recent addition should sustain a higher portfolio of value-added mix as well. The new capacity should also address auto industry, which requires higher-grade steel, but the approval process will be gradual.
Margin levers
The company has secured coal linkages to power its expanded production capacity to the tune of 13-15 mtpa of coal output. It met 95 per cent of its thermal coal capacity requirement in-house in Q2FY26. In-house coal provides cost savings to the tune of 3-5 per cent compared to auctioned coal or from the open market along with supply line security.
The company is also investing in a 200-km slurry pipeline, which is 90 per cent complete, and a 525-MW thermal power plant at Angul. These projects, which are nearing commissioning, should save on transportation and power costs for the company. Along with operating leverage from higher capacity operations, they should allow for higher cost savings.
Being in capex mode, the company has accumulated a net debt of ₹14,156 crore as of September 2025 and a net debt to EBITDA of 1.48 times. With the stabilisation of the plants in the next one year, Jindal Steel should be looking to deleveraging, providing for financial cost savings to play out as well.
Financials, valuations
It reported revenue of ₹49,765 crore in FY25, which is a 3 per cent CAGR revenue decline in FY23-25, as steel prices were declining with stagnant output. But with correction of coking coal prices and in-house supply of coal, the company delivered 5 per cent CAGR decline in raw material cost per tonne, which allowed for flat EBITDA growth in the period.
Jindal Steel should deliver a strong growth in steel output from the expanded capacity in the first phase and improved margins from the efficiency projects. But with the company trading at 7.7 times one-year forward EV/EBITDA — a 30 per cent premium to last five-year average, we recommend investors accumulate the stock as the steel output grows.
Published on December 20, 2025
