Jindal Stainless Limited (JSL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Jindal Stainless Q1 FY '26 Earnings Conference Call hosted by Motilal Oswal. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Alok Deora from Motilal Oswal. Thank you, and over to you, sir.

Thank you, and welcome, everyone, to the earnings conference call for Jindal Stainless. I would first like to thank the management for giving us the opportunity to host the call. So from the management team, we have with us today Mr. Abhay Jindal, Managing Director; Mr. Tarun Khulbe, CEO, CFO and Whole-Time Director; and Ms. Shreya Sharma, Head of Investor Relations. To start with, I will hand over the call to Shreya and post the introduction by Mr. Jindal, we can take up the Q&A. Over to you, Shreya.

Thank you, Alok. Good evening, everyone, and a warm welcome on Q1 FY '26 earnings call. We have shared our Q1 FY '26 earnings presentation with the stock exchanges, which is also available on the company's website, and today's call discussion will be on the same line. Please note, some of the information on this call may be forward-looking in nature and is covered by the disclaimer on Slide 2 of the earnings presentation. Now I would like to hand it over to our Managing Director, Mr. Abhyuday Jindal. Over to you, sir.

Thank you, Shreya, and a very good evening to everyone, and welcome to our earnings call. I will first discuss the key business highlights for the quarter ending June 2025, following which Mr. Khulbe will take you through our operational and financial performance. Building on the positive momentum from last quarter, our sales volume in Q1 FY '26 grew by 8% year-on-year and remained steady quarter-on-quarter, mainly supported by sustained domestic demand. Focusing on specific segments, auto sector deliveries increased on account of special grade materials with segments such as lift elevators, railways, white goods also delivering a healthy performance in the quarter. Our special Product division continued to support this momentum, contributing across key applications. Overall, domestically, we are witnessing increased adoption of stainless steel in large-scale infrastructure projects such as metro rail, airports, railways, among others, signaling a growing shift towards long-term sustainable material used in public infrastructure. The global trade environment, as we all know, is extremely dynamic, driven by tariff disruptions and ongoing realignment of global trade flows. Amid challenging global trade conditions, we are strategically prioritizing the domestic market, which offers compelling opportunities to maintain our growth momentum. Our flexible market strategy supports our commitment towards volume growth. I'm happy to share that owing to the success of our co-branding initiative in the pipe and tube sector, which supported our growth in this segment, the Jindal Sathi campaign is now extended to kitchenware and sink category. This initiative reinforces our commitment to quality and will lead to enhanced business opportunities. In the context of trade measures, the Indian Stainless Steel Development Association has submitted an application to DGTR on behalf of the stainless steel industry, seeking action on certain cold-rolled stainless steel flat products from China, Vietnam and Indonesia. Considering the increasing adoption of trade protection measures worldwide, we trust appropriate measures will be adopted to curb the injury to domestic industry. On the sustainability front, we continue to make strong progress towards decarbonization. In FY '25, we achieved a 14% reduction in Scope 1 and 2 of GHG emissions through our ongoing initiatives. Reaffirming our commitment to sustainability and safety, we received the [indiscernible] Platinum certification, the highest level of certification under the globally recognized LEED Green Building rating system. In addition, we are fully compliant with CBAM's quarterly reporting requirements and remain strongly committed to reducing our CO2 emissions. As the framework evolves, we remain agile and dedicated to staying ahead of compliance obligations, ensuring we continue to serve the European market with confidence, transparency and a strong focus on sustainability. With this, I would like to hand over to Mr. Khulbe to discuss our operational and financial performance

Thank you, Abhyuday. Good day, everyone. Welcome to the call. I would like to begin by providing a detailed overview of our operational and financial performance. Our deliveries stood at [ 6,26,252 ] metric tons in Q1, an increase of 8% year-on-year basis, but remained flat Q-on-Q. Our Q1 EBITDA increased 8% Y-o-Y and 23% Q-o-Q to INR 1,310 crores, while our PAT stood at INR 715 crores, an increase of 11% Y-o-Y and 21% on Q-o-Q basis. During the quarter, we benefited from an enhanced product mix with increased volumes of value-added products and special grades. Our digitization initiatives, including Stainless Mart and QR code loyalty program for pipe and tube leading to seamless customer experience is driving deeper customer engagement. Other initiatives such as Stainless Academy and fabricator training program is building a robust ecosystem to support stainless steel usage across industries. On the balance sheet side, there is an improvement in our net debt position with a reduction in net debt to INR 3,869 crores as on June 30, 2025, underscoring our ongoing emphasis on maintaining a healthy balance sheet. This prudent approach positions us well to navigate the prevailing global macroeconomic headwinds. This is also being reflected in our leverage ratio. We remain comfortably paced with a net debt-EBITDA ratio of 0.81, well below 1 and net debt to equity of 0.22. On the subsidiary front, [indiscernible] continues to ramp up in line with our expectations with capacity utilization reaching approximately 60%, 65% for Q1 FY '26. Our other subsidiaries have also delivered a satisfactory performance in terms of EBITDA contribution at group level. Meanwhile, our SMS project in Indonesia is progressing well and remains on track within the defined time line. Looking ahead, we remain confident in the continued growth of domestic stainless steel demand, driven by strong economic activity and infrastructure-led consumption, reflecting a broader shift towards long-term sustainable material use in public infrastructure. This brings my remarks to a close. I would now like to hand it over to the moderator to begin the question-and-answer session.

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

Congratulations for a good performance in very testing quarter. A couple of questions from my side, sir. The first one is essentially on -- if you could highlight the performance, particularly of [indiscernible] and on progress of ongoing CapEx at Jajpur plant with respect to downstream capacities and logistics infrastructure that we mentioned earlier, that would be very helpful.

So [indiscernible], now we are almost running at 80%, 85% of capacity utilization. While definitely, our original plan was to produce more of rebars from there and sell it. But so far, we have not been able to do so. Majority of our production, almost 70% of the production is the wire rod. So -- but our endeavor is to get more and more into rebar, and that is what as a company, we are continuously making efforts.

And generally, during the monsoon period, anyway, as we all know, construction infrastructure projects do take a slowdown. So same way, Rathi for rebar side, we saw the slowdown, which we expect next coming quarters to pick up now.

And also in some private places, we can see that some people showing interest even in the stainless steel rebar for the buildings for us as well. And on CapEx front, like so far as the spending is concerned, we had given a guidance of around INR 2,700 crores CapEx for this FY '26. So out of which in Q1, we have already done INR 665 crores. Broadly, all the CapEx are in line with the time lines, what has been given earlier. So basically, our downstream, as you were asking, in FY '27 is what we had given the numbers. So broadly, they are -- so far, they are.

They're on track. As of now, they're all on track.

Wonderful. I glad to go that. The second one is a very interesting point you have made in the press release that we are supplying to defense, particularly the stainless steel required for AGMs. Now considering that in India, defense is catching a lot more traction, particularly, I mean, with respect to marine platforms or even aerospace or missiles. So do you see this particular segment as something very promising for us? If you could just [indiscernible]

Absolutely, it is still in terms of low in volume, if I can say, but very high in value and extremely prestigious also. And always, we have been a company to support our country. We have to be Atmanirbhar. We should not be depending on special grade from outside India. So we do see it as becoming an important division of ours.

I know you can't dive a lot of details with respect to the sense. But if you could highlight that are we carrying some R&D here? Are we developing some new grades? And broadly, what all platforms we are looking to cater to in the future?

So it's a mix of all, Amit. It's also currently substituting certain grades that are being imported. And as always, our R&D team is working on new variants, better performance grades in a lot of applications. I mean we are catering to all 3, Army also, aviation also, Navy as well and even aerospace, ISRO and VSSC and HAL. So now we are present. But again, like I'm saying, the volume is still relatively small.

The next question is from the line of Ritesh Shah from Investec.

First, congratulations for a good set of numbers. Sir, just trying to appreciate quarterly improvement in EBITDA per tonne. Like one can think of a few variables. One is [indiscernible] is probably product mix, which could probably also include CR to HR ratio, which might have improved because of [indiscernible]. Third could be potentially inventory gains or probably we didn't have losses probably what we had in Q4 into Q1 that could have reversed. Fourth could INR 200, 300, 400 change in mix. So can you help us understand basically broadly these 4 variables and any other variables which would have contributed to improvement in spreads on a sequential basis, please?

You have answered the question extremely well, Ritesh, and these are the main factors. So Q4 was abnormally low. Q4 of last year was abnormally low because of these factors, like you have mentioned. And in Q1, there has been a healthy increase of our CR capacity due to Chromeni, which definitely impacts. There has been increase in special grade sales into auto, lift elevator, white goods sector. So that is why we are seeing improvement. And then for that reason, only our guidance, even after Q4, we maintained INR 19 crores to INR 20 crores.

Yes. After Q4 of last year, we did not dip our guidance, and we maintained it because Q4 was an aberration quarter totally. So now we are quite confident of delivering these numbers.

Sir, would it be possible for you to indicate some numbers on CR to HR volumetric mix, Chromeni contribution at the EBITDA level? And third is basically probably what was inventory loss, if there was any inventory gain in this particular quarter?

So in terms of Chromeni, definitely, I think now we are at 65% capacity utilization. And every month, we should see that increase. In H2, we intend to take it to around 80%, 85% 80%, 85% by H2 of this year. And like from EBITDA perspective, we give always a blended number. So we're sticking to that between INR 19,000 to INR 21,000. We still like to stick to that.

Sir, CR to HR, where we are where the aspiration is to be [indiscernible]

So like if we compare from Q4 to Q1, in CR, almost 12% increase we have already done. And as we said that once this -- in H2 once the Chromeni further ramps up, this number should go to 15% to 20% over Q4. I'm talking CR to CR increase.

And if you ask aspirationally, our target is to take our total CR capacity to at least 75% of our melting capacity. That is an aspiration, but that will take a few years and what CapEx we are doing is in tune or in line with that.

Sure. Sir, my second question was I wanted an update on the blast furnace 2 million tonnes, which is under the promoter entity. Any update over here? And I just wanted to tie this thing up because once this furnace comes, we had the opportunity to use more NPI. So I don't know the time lines. To my knowledge, it was August '25. So are we on schedule and how it will impact the cost curve for Jindal Stainless going forward?

So Ritesh, they're still very early to answer these questions. There has been a certain little bit of a delay in our blast furnace operations. But being a private entity, I would like to take this maybe offline with you.

Sure. And if -- just one question, last question on CapEx priorities. We had deferred [indiscernible] and HRAP. So what is the status over there? And anything incremental on Maharashtra expansion, what we had spoken about in the last call?

So HRAP is on track. Like we said by FY '27, maybe H2 of FY '27, our HRAP line should be commissioning. And Maharashtra project, like we said, land acquisition is on track and things are progressing smoothly there as well.

The next question is from the line of Vikas Singh from ICICI Securities.

Sir, just coming back to the Maharashtra project since you're already acquiring them, so have you something in mind that in first phase, what kind of capacity which you are going to put up? And what could be the potential CapEx for that?

So in Maharashtra, whatever we have announced that the capacity will come in phases in the module of 1 million, 1 million tonnes, this is what we have already stated and this information is clear up to 4 million tonnes is what we have announced. And yes, we still intend to build it that way. But of course, 5 years is also a long time. If we see demand-supply situation changing, maybe then we can accordingly amend our plans and handle the things accordingly. So because right now, we -- all these things are open, yet to be tied up.

So basically, like Mr. Khulbe is saying, our Maharashtra plan that we have announced are still remaining intact. And at a large level, it's going to be a 4 million tonne project that we're envisaging. But again, depending on market conditions, depending on global, let's say, uncertainty or opportunities, we can either expedite it also or if required, delay it also. But looking at all things positive, we would like to stick to our time lines.

So that's what I understand, sir, just wanted to know this Phase 1 of 1 million tonnes, have we finalized any initial CapEx for the Phase 1?

No. No, CapEx has been finalized, but we are targeting FY '29, '30. Plans are ready. As soon as our plans are ready because we would like to take all our shareholders through it. So we will come with a proper announcement and interaction. Noted, sir. Sir, this quarter, JUSL numbers EBITDA suddenly jumped sharply, which also was one of the reasons for the good performance. So anything -- what has happened actually because volumes seems to be growing at the same pace?

So JUSL, I mean, I believe all of us know that this is -- first of all, it is 100% subsidiary to JSL. JUSL works on a job work model. And because we have already announced our volume growth, of 9% to 10%, which is the guidance what we have given and because company is performing, then in line with that, JUSL performance is also reflecting the similar.

So I was comparing on the sequential basis, it went from INR 172 crores to INR 192 crores, but the volumes on a sequential basis is actually slightly down. So if you could just elaborate what has actually contributed to that jump?

Yes. So actually, in that also through JUSL, some materials we also sell beyond tolling. So some changes in that impact. But broadly, whatever the numbers you are seeing, we believe that the similar kind of performance can be maintained.

Understood, sir. Sir, lastly, on our Indonesian venture, if you could give an update on the NIP as well as the other 1 million tonne facility, which you are putting up. So some update on those? So on Mhrop, I will say that it is in line to whatever we have announced, we had given that in FY '26. FY '27, this will come. So we believe this is progressing well. So far as NPI is concerned, there we are producing, we are ramping up and ramped up to a certain state. But yes, nickel fluctuations are there. And because of that, so far as EBITDA is concerned, we see it in the range of INR 500 crores to INR 1,500 crores, but fluctuating because things are a bit fluid on that side of the market, whether it is nickel ore, whether it is -- I mean, so many things are happening on that front. But again, I will repeat that, that business for us is also raw material security, and we see it that way also to that business.

The next question is from the line of Parthiv Jhonsa from Anand Rathi.

So before we dive into the questions, I just wanted to get a quick breakup on the 200, 300 and 400 series for the Q1.

Yes, sure, Parthiv. So for this quarter, I read it out in the sequence of 200, 300 and 400. It was 36%, 46% and 18%.

Okay. Sir, my first question is pertaining to the potential so-called antidumping duty. Any time line what you can give us pertaining to the antidumping duty, what can we expect, what not to expect on this particular topic?

So I can give you the latest update. DGTR has allocated the official -- 2 officials to the case who are evaluating and have raised certain clarifications from the industry, and the industry is collating all the responses and clarifying them. And generally, the standard duration for completion is approximately 1 year. But considering the increase in adoption of trade protection measures worldwide, industry is hopeful of the earliest initiation followed by recommendation. So just to summarize, they have allocated officials to start the process. The question-and-answer kind of clarifications are on, and we are quite hopeful within the next couple of months, investigation should start.

Sir, the next question pertains to the current tariff scenario, especially from the U.S., considering multiple global headwinds, especially from U.S. and EU side of geographies. Though you have kept -- we really appreciate that you have kept your guidance unchanged. But I believe the change in export mix definitely have some impact on the realization. Is the understanding correct? And if so, what can we from this that what can be the differential in export and domestic? And what kind of impact it can have?

So like we've been saying for the last couple of years, actually, our focus is primarily domestic and EBITDA maximization. So export has never been a compulsion of ours. Export, we are continuing to supply our long-term customers that we have built over many decades. Those are the only ones that we would like to continue to support. Our focus is EBITDA maximization. Currently, domestic market is where we are seeing maximum opportunity, maximum demand also coming in, and that is going to be our primary focus. And like I said, export is not a compulsion. So if we see some good opportunity, then only we would like to export. Otherwise, we will continue to service our domestic market.

And sir, if I may just squeeze in one more. Just wanted to get your guidance on the nickel and for the coming quarters and also on EBITDA per tonne, considering you have fared really well in Q1 and also your GSL target is expected to remain around the same level going forward. So you can just give some guidance would you tend to change your EBITDA per tonne guidance slightly higher going forward? Or you still keep it intact about 19,000 to 21,000?

At this moment, we will stick to 19,000 to 21,000. And definitely, if we see certain things changing and we'll come with a revised guidance as we always do. So we would like to stick to that. What was your first part of the question?

Your outlook on nickel, sir. How do you foresee the prices going forward for the Q2 and...

It's very difficult to really predict nickel, but we expect it to remain at the current levels. It's been hovering between, let's say, INR 14,000 to INR 16,000 and our expectation is that it should remain at this level. But like I would also mention, we never take a position on nickel. We always work on natural hedging, and that is how we will continue.

The next question is from the line of Sagar Sahu from Jefferies.

I just wanted to get your sense on what has been happening with imports from China in the last few months and if implementation of BIS norms has had any impact?

So this is true that government, the BIS and also the Ministry of Steel, they have come out with some clarifications on the QCO requirements where the ingredient product also should be BIS compliant. And also the BIS has been made mandatory on certain downstream products as well. So all this definitely has put some restriction on the inferior quality products getting into the country. And with that, some amount of reduction in the imports we can see. And we believe that this also means that the quality product requirement within the country should go up, and that should help industry as well. But at the same time, we would like to watch it for some time because in the past, we have seen sometimes government also sometimes changing their position. But we are hopeful that this time, they should not be because already we have seen the kind of discussions or representation made to the government, but they are not budging because this is something linked to the quality, and that is why they are keeping to the ground.

It's a very welcome move, and I think it will support the entire country for a long term to come. There have been so many examples in the recent past where people have used substandard Chinese material and infrastructure projects are failing, other things are getting destroyed. So this is a very welcome move to only allow quality products in India, and it's a very good opportunity for everyone to take benefit of this.

My second question is around domestic demand and your strategy around co-branding, et cetera. So you mentioned that the strategy in pipes and tubes has been successful and has been extended. Is there any plan to do something similar in any of the other segments as well?

Like I mentioned, we just started for kitchen wear and for sinks. And every time, actually, you will see more and more addition also because, again, we would like to support our MSME, we would like to support our domestic players in this regard. So we are definitely taking this forward.

The next question is from the line of Ritesh Shah from Investec.

Sir, I think you indicated CapEx of INR 2,800 crores. Is that correct?

INR 2,700 crores.

And how should we split for '26 and '27? I presume it's for 2 years together?

Ritesh, FY '26, it's INR 2,700 crores. And whatever is the spillover CapEx in case it is going to be there in '26 -- '27, sorry. Otherwise, for '27, the CapEx amount is roughly around to the tune of INR 1,000 crores -- INR 1,000 crores to INR 1,200 crores.

Okay. I think in the last call, we had indicated a number of INR 1,800 crores plus maintenance CapEx. So how should one understand this bump from INR 1,800 crores to INR 2,700 crores?

No, it was always -- even in the last call, if you go by the transcript event, it was always INR 2,700 crores for FY '26. INR 1,700 crores plus INR 1,000 crores. Yes, which includes the last year's spillover as well.

INR 1,700 crores plus INR 500 crores of maintenance plus INR 500 crores of spillover, which is total INR 2,700 crores.

Sure. That's helpful. Second is, Indonesia, we were looking to dispose assets. I think we had got something around $20 million, and there was balance also which was pending and we were awaiting the proceeds. Any indication over here on how much of money has already come in, how much incrementally can come in and time lines?

No. So equipment, you have already stated, that is what the number is, $20 million. After that, what remains is the land. Land, not yet any deal made, but we are confident looking at the market prices over there that no such -- finally post we sell the land, no hit comes to the books of the company.

And we are not in any desperation. So when we get a good value, then only we will sell the land. Sure. And do we have any plans to merge the acquired downstream assets? Because I presume there were accumulated losses over here. Any plans on this front for tax efficiencies?

So that is something -- I mean, it is in the process of evaluation. And once we make any decision, we will let you know.