Jindal Stainless Limited (JSL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Jindal Stainless Limited Q3 FY '26 Earnings Call hosted by Prabhudas Lilladher Private Limited [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Tushar Chaudhari from Prabhudas Lilladher Private Limited. Thank you, and over to you, sir.

Thank you, [ Puni ]. Good evening, and a very warm welcome to everyone. On behalf of PL Capital, I am pleased to welcome you all on the Q3 FY '26 earnings call of Jindal Stainless Limited. We are happy to have the senior management of JDSL with us for next 1 hour. Management is represented by Mr. Abhyuday Jindal, Managing Director; Mr. Tarun Kumar Khulbe, CEO, CFO and Whole-Time Director; Ms. Shreya Sharma, Head of IR; and other senior management team. So we will begin with the opening remarks from the management, followed by an interactive Q&A session. With this, I hand over the call to Ms. Shreya. Over to you, Shreya.

Thank you, Tushar. Good day, everyone, and thank you for joining us for the company's Q3 FY '26 earnings call. I hope you all had a chance to review the results and the accompanying presentation uploaded on the exchanges and on our website earlier. Our discussion on this call will follow that presentation. Before we begin, I would like to remind you that some of the statements made today may be forward-looking in nature and are covered by the disclaimer on Slide 2 of the earnings presentation. Joining me on the call today is the senior leadership team, who will take you through the key business developments and the performance for the quarter. After the remarks, we will open the floor for the questions. With that, let me hand it over to our Managing Director, Mr. Abhyuday Jindal, to take you through the highlights. Over to you, sir.

Thank you, Shreya, and a very good evening to everyone. I would like to welcome you all to the Q3 FY '26 earnings call. I will begin by outlining the key business highlights for the quarter ended December 2025 and the progress we continue to make across our priority sectors. Following that, Mr. Khulbe will take you through our operational and financial performance. Continuing the positive momentum, our sales volume in Q3 FY '26 grew by 11% year-on-year and remained steady quarter-on-quarter, supported by sustained domestic demand amid volatility in the export market. In the domestic market, JSL's performance was consistent, underpinned by the demand momentum from key sectors such as automotive, ornamental pipe and tube, railways, metro, lift and elevator white goods. Last quarter, we also launched the JSL Saathi Pragati, initiative for the stainless steel pipe and tube segment, a key step in our commitment to empower fabricators and retailers to verify products instantly and to reward their efforts in enabling product authenticity. Stainless steel demand in the passenger coaches segment also saw increased traction from design revisions in Vande Bharat and new orders from Vande Bharat sleeper class. The new thrust on Amrit Bharat coaches is expected to further boost stainless steel demand in the sector. Higher activity in metro projects across the country also supported the delivery momentum. I'm pleased to report that our stainless steel has been accepted by IPF Chennai for the fabrication of external sidewalls of metro cars being supplied to the Kolkata Metro. GST cuts supported festive season demand from white goods segment, supporting strong deliveries during the quarter. Sequentially, the auto segment also saw strong volume growth driven by lower GST rates on combustion -- ICE combustion vehicles. On the export front, global trade sentiment remained subdued due to ongoing uncertainties and the protectionist measures in key Western markets, particularly the United States and European Union. In response, the company continued to strategically prioritize the domestic market with a focus on providing value-added solutions tailored to the needs of our long-term partners. On the import side, subsidized interior materials continue to enter our country. The temporary suspension of QCO is definitely a matter of concern and poses a discouraging setback for quality-focused domestic industry players. We remain hopeful that the government will strengthen and enforce frameworks that uphold quality standards to protect consumers, MSMEs and all. In this environment, Jindal Stainless retained its market share through its competitive pricing, robust distribution network, cost competitiveness and customer-focused initiatives such as Jindal Saathi team and QR code and loyalty incentive programs. On sustainability front, I'm happy to report that JSL achieved an S&P Global Corporate Sustainability Assessment score of 78 out of 100 for FY '25, ranking us among the top 5% in the steel sector and securing fourth position globally. Securing one of the top global positions in the DJSI modeled ESG ranking is a very proud moment for us. Our significant improvement over the years -- past year scores reflects our continued commitment to responsible growth grounded in transparency, innovation, care for our people and the planet. In parallel, our renewable power utilization at Jajpur and Hisar facilities has steadily increased, now 56% of our total imported power in Q3 '26 making a significant step towards cleaner and more sustainable operations. With this, I would like to hand over to Mr. Tarun Khulbe to discuss our operational and financial performance. Thank you.

Thank you, Abhyuday. Good evening, everyone. Welcome to the call. I would like to begin by providing a detailed overview of our operational and financial performance. Our Q3 FY '26 deliveries are at 0.65 million tonnes with an increase of around 11% on year-on-year. Our Q3 consolidated EBITDA increased by around 17% year-on-year and around 1% on quarter-on-quarter to INR 1,408 crores while our consolidated PAT stood at INR 828 crores, an increase of around 23% on year-on-year and around 2% on quarter-on-quarter basis. For 9 months FY '26, our deliveries stood at 1.92 million tonnes with an increase of around 11% year-on-year. Consolidated EBITDA increased by around 14% year-on-year to INR 4,106 crores and consolidated PAT stood at INR 2,350 crores with an increase of around 23% year-on-year basis. We are pleased to report continued improvement in our balance sheet. As of December 31, 2025, our consolidated net debt has further reduced to INR 3,451 crores with a net debt-to-EBITDA ratio at 0.67, comfortably below 1 and a net debt-to-equity ratio of 0.18, reflecting our disciplined approach to financial management. This robust financial management continues to place in the better position to navigate ongoing macroeconomic challenges. Turning to subsidiaries front. All subsidiaries have shown improvement and contributed positively to the group's overall EBITDA. Operationally, we are encouraged by the ramp-up at Chromeni and NPI with both experiencing an increase in capacity utilization. Our SMS project in Indonesia and aligned downstream capacity expansion in India are progressing well and remain on track as per the time lines. I would also like to inform that the Board of Directors have approved an interim dividend payment for FY '26 of INR 1 per share with a face value of INR 2 each, aggregating to a payout of nearly INR 82.44 crores. The record date for the purpose of payment has been set as January 29, 2026. To further develop the stainless steel ecosystem and capabilities, we have signed MOUs with 4 government industrial training institutes in Odisha, Uttar Pradesh and Maharashtra to implement a 155-hours stainless steel fabrication course as a part of their curriculum. India's stainless steel demand is rising in line with its economic and infrastructure growth. We are proud to support the shift towards this sustainable [indiscernible] metals. With that, I conclude my remarks and invite the moderator to begin the question-and-answer session. Thank you.

[Operator Instructions] The first question is from the line of Amit Dixit from GS.

Congratulations for a very steady set of numbers. I have a couple of questions. The first one is on essentially some kind of a protection mechanism. We have seen that in case of steel, finally, carbon steel, the safeguard duty has been imposed. Now we are also seeing an influx of imports. Though it has not surged, I mean, there was always a very steady high level of imports in stainless steel industry. And I understand that we have been working with the government in making sure that we get some kind of protection at least against the unfairly priced imports. So just wanted to get an update on that, where are we? Is the government now more conducive considering that a step has been taken for carbon steel players?

So Amit, thank you for your question and always good wishes. So yes, as we mentioned last time also, safeguard, because of the reason you mentioned, there was no surge in imports in stainless steel, and it's been steadily at 30% plus. That's why safeguard was something that they were not in favor of going ahead. Antidumping Duty investigation is on. We are hopeful that the government will give us some relief. So those are the lines we're working on. And on the other side, absolutely, we are pointing to them that once this QCO relaxation was given, imports just further happened again in the last few months. So that is another area that we are constantly picking up with the ministries that a lot of circumvention is happening, import surge has happened. So QCO is definitely required for the entire industry. It will uplift the sentiment. It will increase more investments in this industry for us. So both sides are working. One is on antidumping duty, which we feel next few quarters, we should get some positive response. And on this QCO relaxation should not be extended further.

Great. That's helpful. The second question is essentially on the profitability and volume side. Now if we look at the last quarter, particularly towards the end, nickel prices have been rising, ferrochrome prices have risen. Do you see some kind of impact of this on the finished steel prices as well through increased surcharges? And therefore, what kind of profitability can we expect in Q4? And also, if you could briefly let us know, I know in prepared remarks, you mentioned about the demand environment. But on the overall volume growth, how do we see it in Q4 and going ahead as well?

Okay. So yes, rightly, you indicated or you have said that the raw material prices on nickel in particular, which was otherwise has, in fact, on an average basis has gone down in Q3. But towards December and it started going up. And yes, in the month of January also, it is on the higher side. As all along, we have stated that normally in the stainless steel, the prices are governed by the movement in the raw material prices. So definitely, aligned to that, we could see the movement in the prices of the stainless steel, not only in India, globally as well. So there is a price movement into that. So far as our profitability part is concerned, whatever guidance we have provided for the year, INR 19,000 to INR 21,000 per metric ton is what we had given. We have delivered in 9 months an average of around INR 21,300. And we believe that this year on an average basis, around this number we should be closing.

Yes. So whatever guidance we had given in terms of volume growth and EBITDA per tonne, we are extremely confident of meeting those numbers. It is still because of certain of the geopolitical situation, QCO relaxation, we would like to stick to this guidance only.

Our next question comes from the line of Alok Deora from Motilal Oswal.

Congratulations on decent numbers. Sir, just had a couple of questions. One is on exports. So if you could highlight why the sharp drop in export contribution to the volume? And how do we see that going ahead? And second is on the -- any change in the mix in terms of HR and CR in the overall because there also we are looking at some improvement in the mix. So if you can just hit on that.

So definitely, as you are all aware, export is a very uncertain situation because of the geopolitical factors. Nothing to do with the company. We are still sticking to our supply chain. We are still supplying our customers. It is more from a customer side because of this lack of clarity that is there, whether Mr. Trump every day wakes up announces something new plus CBAM is on our heads, where even in December, we changed certain rules or nomenclatures. So it's the uncertainty that is not letting our customers book further orders. We are absolutely geared up. We have been supplying, catering to them for decades now, and we'll still continue to do that. And on the other side, as a company, which I've always stated, our goal is for EBITDA maximization, creating more shareholder value. So if we are seeing that in the domestic market where there is good demand, then we would be more than happy to cater to the domestic market. So export is more on account of global geopolitical situations. And to your second question, CR output has definitely increased. So maybe Mr. Khulbe can add to that.

Yes. And just sir, to add to whatever you have given because even on CBAM, so just to add that towards the year-end only or towards the December end only, eventually, they came out with the threshold levels and calculation methodologies. But still the -- who will be verifying it and the verifier -- verification methodology of this tax calculation is still not -- has come out, which is again holding customers some of confusion or uncertainty into their mind. Now coming to the mix of HR and CR, 2 ways we can look at it. If you look at our only CRAP percentage of the overall sales, so now it is at around 55%, which was at around 50% a year before. But then if you look only HRAP and CRAP ratio, then I can give you a 3 years trend. So in Q3 FY '24, it was around 40% HRAP, 60% CRAP, which changed to 35% and 65% CRAP. And this financial FY '26, Q3, it is 30% and 70%. So somewhere our investments into the downstream, our acquisition of Chromeni, all that has helped us in improving this percentage of CRAP.

Sure. Just one follow-up on the export side. So whatever volume guidance we are -- whatever volume we are expecting for FY '27, so even if exports were to be lower at, say, 5% to 6% in terms of contribution to total volume, we don't expect to have any major slippage in terms of overall volumes?

Not at all. Absolutely not.

Our next question comes from the line of Parthiv from Anand Rathi.

I hope I am audible. So my first question is a very generic one. Just wanted to get a breakup of between the series, if Shreya can help us off.

Yes. So Parthiv, I just read it in order of 200, 300 and 400. So in quarter 3, it was 38%, 45% and 17% and for the 9 months, it was around 36%, 47% and 17%.

Perfect. That's quite helpful. So my first question is just taking a couple of points on the comments forward from the previous analyst. If you see right now, our blended ASP for quarter 3 was about INR 1,61,000, which was a fall of almost about 4%, 4.5%, whereas your blended stainless steel market was down by about, say, 2%. I believe there is some aspect of export which plays out, but just wanted to get your understanding for the -- for, say, FY '26 for the last quarter and for '27, how do you expect the stainless steel prices and your realizations to improve...

So I think we have to look at it from the 2 angles. So first question, you had asked to Shreya that what is your series mix. So the series mix, if you look sequentially quarter-on-quarter basis, then there was almost 4% drop in 300 series and almost equal increase in the 200 series. This is one of the factor that there was a shift in the series mix. Another point is, as we are always stating that stainless steel prices, that is the realization also eventually governed by the raw material movement. And already, as we all can see that the nickel in quarter 3 was a bit softer, and that is where that also impacted the realization.

So do you expect this to cross or stay over, say, right now, it's around blended is about INR 1,90,000, INR 1,91,000 a tonne. You expect that to stay hover around similar level for the remaining part of the quarter?

So it all depends. If the nickel remains on the higher level at the level at which it is, it will definitely lift the average realization than what we attained in quarter 2.

All right. That's actually helpful. Sir, my second question is on CBAM. We understand there were new threshold calculations, which came out. There are certain ways we should look into it. However, just going back a couple of articles, whether it would be in India globally, we have some calculation as far as the carbon steel manufacturers are concerned across the globe, right, whether it be China, India, so on and so forth. Have you done any calculation for our company? What is our CBAM impact, what is on a per tonne basis?

Yes, absolutely. We are tracking that very closely. And like I had announced, which I can repeat, we are actually scoring very high in most of the criteria. Like in the S&P Global Corporate Sustainability Assessment, we scored 78 out of 100. That puts us in the top 5% globally in the steel sector with the fourth position. And in DJSI, ESG model ESG ratings, we have secured the top position in the global. So whatever is available, whatever is an S&P or a well approved body, we're already moving ahead, whatever is required for Indian ratings like BRSR or by SEBI, we are doing all of that. So as a company, we are absolutely geared up. We're all -- everything is in place. It is more clarity that is required from European Union that who is the verifier, when will the verifier come, all that clarity from their side is required. But as a company, we are absolutely geared up in increasing our renewable capacity month-on-month. We've invested in green hydrogen. We are already a scrap-based company. So everything is there in place to ensure that CBAM does not impact us in a very negative manner.

All right. So do you expect this to get some clarity within, say, next maybe a quarter or 2 or it will take beyond that?

My guess is as good as yours. We are also waiting. And like I said, it is from the European Union to decide when they can send the verifiers. But the expectation is this quarter, they should be because they were supposed to start from January, and we're already in the middle of the month. So I'm expecting this quarter, more clarity should come.

All right. And sir, if I may just squeeze a very quick one. I think as per couple of articles, the Indian stainless steel imports are worrying about 20%, 25%, 22% to be precise of the production in last year. So just wanted to get some clarity on it. Do you expect this to go down or remain around the same level? Because I think as of series 300 is the largest, we import the maximum under 300 series. So just wanted to get your overall picture on this, especially on the import front.

Without any government intervention, I don't see these import numbers going down because again, what everyone has to understand and what we are trying to push the government is that globally, every country is trying to protect their manufacturers, trying to protect their borders and India is relatively open. So I don't see this number going down without some kind of government intervention. But despite imports coming -- going down or going up, whatever we are committing to, whatever we have announced, we are very confident of achieving that.

Okay. And just circling back to the CBAM question again. You don't have any numbers in mind, right? You haven't -- have you calculated any given number?

We have calculated all the numbers. This is, again, like I'm saying, it is -- we are waiting on EU to clarify how they want us to calculate and show. So that's why those verifiers are required. Otherwise, like I mentioned, DJSI, S&P, SEBI numbers, BRSR, they're all based on certain calculations, certain metrics, which we have already proven and shown.

Absolutely. So is it possible to share a certain range, whatever is your internal understanding?

I'll ask the team to get back to you if we are allowed to, then...

Our next question comes from the line of Vikash Singh from ICICI Securities.

Sir, just wanted to understand a little bit longer-term growth path. So looking at our capacity and probable 2.6 million tonnes of the volume mandate, we would have another year of 10% kind of the volume growth, and then we would be probably would have to wait until our Maharashtra plant picks up. So just wanted your thought process that do we have a plan to continue to grow at -- at least 10%, 15% for the next 3 years or another 10% growth in the next year and then we have to wait a couple of years of waiting time for the next...

Definitely don't have to wait after this time for, let's say, until our Maharashtra project comes up. We're already firming up our plans of further downstream investments. And if you just give us one more quarter, then by Q4, I will come out with, let's say, next 2, 3-year volume growth target and plans.

Understood, sir.

So just wait for one more quarter, we will definitely come with our announcement.

Noted. Sir, my second question pertains to our subsidiary performance. Given the nickel prices have come down, usually thought process was the stand-alone would have been lower and subsidiaries probably with the same volume should have been maintaining the performance. The reverse has happened. Stand-alone performance was better, while subsidiary seems to be a little bit of on a dip. So if you could give us some idea what has happened, it would be really helpful.

No, not really. I don't see any -- all our subsidiaries have actually done better from our service center to lifestyle. So any particular subsidiary you're talking about, then I can discuss. But if I see the results of most of the subsidiaries from the international ones and the domestic ones, they have done better.

Sir, I'm talking about on a sequential basis. For example, JUSL from EBITDA of INR 205 crores went down to INR 190 crores basically, which is even lower than the Y-o-Y basis. So anything which has happened in the JUSL?

Yes. So in JUSL, there was a shutdown and there was -- because this subsidiary essentially works on a job work model. So the volumes were lower, and that is one of the reasons. But at the same time, if you look at the numbers at EBITDA per tonne and all that, you'll find that there the things have, in fact, improved.

This shutdown has been over, right? So we...

Now it is over. Yes, correct.

Noted, sir. And sir, just lastly, on our debt side, basically, given there is still some time on the large CapEx to take place, what is our assessment in terms of the net debt at the end of FY '26 or maybe FY '27?

So our net debt as of now at the end of the quarter 3 is INR 3,451 crores. Now when we had provided a guidance at the beginning of the year, we had given -- we had estimated to be closing the year in the range of INR 3,500 crores to INR 3,700 crores. But now looking at the current situation, we believe that this year, we should be closing somewhere around where we are already or maybe a bit even lower than what net debt position we have at the end of quarter 3.

So no further reduction and what is causing that? Because overall cash inflows seems to be pretty healthy for Q4 as well because usually, volume-wise, that is the best quarter. So...

So I've already stated that, that could be even slightly better position than where we are because it also depends some of the -- I mean, we have to look at some of the possible payments and all that.

Okay. Just let me rephrase this. How much of the CapEx we have spent in 9 months? And what is the fourth quarter target?

Okay. So we had given a guidance of INR 2,700 crores as a CapEx for the whole financial year FY '26. INR 2,200 crores we have already done, and we are on course of completing or ending with INR 2,700 crores -- around INR 2,700 crores of CapEx in the FY '26.

Our next question comes from the line of Satyadeep Jain from AMBIT Capital.

Just another follow-up question on CBAM. What you -- what I'm trying to understand is it seems that you've not got the emissions verified. So this -- whatever you're sending will be default -- the emissions will be default emissions that the importer will have to use. Is that the current status? And given the order pipeline that you have, just trying to see how much beginning of imports from Europe or your exports to Europe could be in the next quarter or 2?

No. What we said that in CBAM, the European Union has come out with threshold levels and calculation methodologies. But what they have not yet come out with the verification methodology and who is going to verify the calculations. Now in the absence of that, we have seen that a lot of changes, frequent changes are being done even with whatever they have suggested so far, we have found them changing. So that is why we are also waiting for this process to be absolutely clearer, let them clarify that how the verification will be done, let them say who will be authorized to verify it. And then probably we'll be making better discussion when all this happens.

Just wanted to discuss this because in the document that CBAM put out, they seem to suggest that many companies during the transition phase, it's been a 2-year transition, did get their emissions verified. So you are stating that there was nobody who reached out your emissions are not verified. Anybody who's importing JSL steel into Europe will have to use default emissions till the emissions get verified. Just trying to...