Jindal Steel Navigates Seasonal Headwinds with Strategic Expansion and Digital Drive in Q2 FY26

Jindal Steel Limited, a prominent player in the Indian steel sector, recently unveiled its performance for the second quarter of Financial Year 2025-26 (Q2 FY26). The period was marked by significant strategic advancements and capacity expansions, even as the company navigated seasonal market weaknesses and global price pressures. Despite these challenges, Jindal Steel demonstrated resilience, driven by its focus on value-added products, disciplined capital allocation, and a robust digital transformation agenda.

The company reported a consolidated gross revenue of INR 13,505 crore for Q2 FY26. Adjusted EBITDA stood at INR 1,875 crore, with a profit after tax (PAT) of INR 635 crore. Production volume for the quarter was 2.00 million tonnes, while sales volume reached 1.87 million tonnes. The performance was notably impacted by a prolonged monsoon season and planned shutdowns for maintenance and capacity ramp-up, which incurred a non-recurring cost of approximately INR 174 crore. However, the company's strategic emphasis on value-added sales proved beneficial, reaching an all-time high of 73% of total sales, partially offsetting the impact of softer steel prices.

Operational Milestones and Capacity Expansion

Q2 FY26 was a landmark quarter for Jindal Steel, particularly concerning its Angul facility. The company successfully commissioned two major plants: the 4.6 million tonnes per annum (MTPA) Bhagavati Subhadrika Blast Furnace-II and the new 3 MTPA Basic Oxygen Furnace-II (BOF2). These additions have more than doubled the hot metal capacity at Angul to 8.85 MTPA and increased crude steelmaking capacity from 6 MTPA to 9 MTPA. These synchronized assets are crucial steps towards achieving the stated goal of 12 MTPA at Angul and an overall steelmaking capacity of 15.6 MTPA by the end of the current fiscal year.

Beyond these major commissions, Jindal Steel also made significant progress on other key projects. The 200 km eco-friendly slurry pipeline is 90% complete, and the coal pipe conveyor has seen 100% civil work and 95% structural work completion. These infrastructure projects are set to enhance logistical efficiency and sustainability. The CRM complex saw the commissioning of CGL-1, with multiple other lines slated for progressive commissioning in FY26. Mining activities at Utkal B1 are expected to commence in H2 FY26, further strengthening raw material security.

Digital Transformation and Market Dynamics

Jindal Steel is actively embracing Industry 4.0 and AI to drive operational excellence. The company has deployed IoT sensors for predictive maintenance, computer vision and video analytics for PPE compliance and billet counting, and AI models for power demand forecasting and blast furnace optimization. These initiatives aim to make processes safer, smarter, and more efficient, ultimately leading to higher productivity and lower costs.

From a market perspective, the quarter presented a mixed bag. Global steel demand was influenced by high Chinese exports, which continued to put pressure on international prices. India, despite its strong domestic growth, remained a net importer of steel for the sixth consecutive quarter. Domestic HRC prices stayed weak, and TMT prices declined due to the prolonged monsoon. However, management anticipates a demand pick-up from November-December onwards, post-festive season, as construction activity is expected to return. The company also guided for a 2-3% saving in overall cost structure over Q2, which could support margins.

Financial Prudence and Future Outlook

Jindal Steel maintains a strong financial position, with its consolidated net debt decreasing by INR 244 crore sequentially to INR 14,156 crore, primarily due to efficient working capital management. The Net Debt/EBITDA ratio stands at a healthy 1.48x, well below the company's committed cap of 1.5x. The company reported strong liquidity with a cash balance of INR 4,682 crore. For the second half of FY26, the company plans a capex of INR 7,000 crore to INR 9,000 crore, primarily funded through internal accruals, demonstrating a disciplined approach to growth financing. The company also continues its policy of maintaining a 200% dividend while investing in growth capex.

Jindal Steel's Q2 FY26 performance underscores its strategic clarity and disciplined execution. By focusing on capacity expansion, value-added products, and technological innovation, the company is positioning itself for sustained growth and enhanced profitability in the evolving steel landscape.