JSW Steel Q2 Profit Soars 270% on Record Production

Introduction

JSW Steel announced a remarkable financial performance for the second quarter of fiscal year 2026, ending September 30, 2025. The company reported a consolidated net profit of ₹1,623 crore, marking a significant 269.7% increase compared to the ₹439 crore profit posted in the same period last year. This substantial growth was primarily fueled by record-high sales volumes, which successfully compensated for a decline in steel price realisations.

Stellar Quarterly Performance in Detail

The steel major's consolidated revenue from operations for Q2 FY26 grew by 13.8% year-on-year (YoY) to ₹45,152 crore, up from ₹39,684 crore in Q2 FY25. This figure surpassed analyst estimates, which had projected revenue around ₹44,170 crore. On a sequential basis, revenue saw a modest growth of 4.6%. However, net profit experienced a 25.7% decline from the preceding quarter.

The company's operational efficiency was also evident in its earnings before interest, taxes, depreciation, and amortization (EBITDA). Consolidated adjusted EBITDA stood at ₹7,849 crore, a 39% YoY increase, supported by higher production volumes and reduced costs for key inputs like iron ore, coking coal, and power. The reported EBITDA for the quarter was ₹7,115 crore.

Record Production Drives Growth

A key factor behind the strong results was the company's record-breaking production output. JSW Steel achieved its highest-ever crude steel production of 7.90 million tonnes, a 17% increase YoY. This surge was attributed to the Dolvi plant returning to optimal capacity after maintenance in the previous quarter, along with successful ramp-ups at JSW Vijayanagar Metallics Ltd (JVML) and Bhushan Power & Steel Ltd (BPSL).

Domestic and Export Sales Breakdown

The robust production translated into strong sales figures. Domestic sales reached 6.33 million tonnes, reflecting a 14% YoY and 6% quarter-on-quarter (QoQ) increase. The company also saw a significant rebound in its export market, with volumes rising 89% YoY and 56% QoQ. Exports constituted 10% of the sales from Indian operations. Furthermore, retail sales volumes expanded by an impressive 26% YoY and 13% QoQ, indicating strong demand in the consumer segment.

Financial Health: Debt and Costs

JSW Steel managed its balance sheet effectively during the quarter. As of September 30, 2025, the company's net debt saw a slight decline to ₹79,153 crore from the previous quarter. The Net Debt to Equity ratio stood at 0.93x, and the Net Debt to EBITDA ratio was 2.97x, indicating a stable leverage position.

Management's Economic Outlook

Looking at the broader economic landscape, JSW Steel's management noted that global growth in 2025 showed resilience. However, the outlook for 2026 remains cautious due to potential headwinds from elevated tariffs and ongoing geopolitical uncertainties. For the Indian market, the company anticipates continued economic support. It expects that GST reforms will likely boost consumption in key sectors such as automobiles and consumer durables in the second half of the fiscal year.

Peer Comparison

What the Analysts are Saying

Brokerages have offered a mixed but generally cautious outlook on JSW Steel's stock following the Q2 results.

• Nuvama maintained a 'Reduce' rating with a revised target price of ₹1,050. The brokerage noted that better-than-expected EBITDA was driven by volume growth and lower raw material costs, which offset a 5% drop in blended realisation. They anticipate a rise in steel prices in the coming months but have trimmed their FY26/FY27 EBITDA estimates slightly.

• Centrum Broking resumed its coverage with a 'Neutral' rating and a target price of ₹1,114. They found the results to be in line with estimates and highlighted the Supreme Court's approval of the BPSL resolution plan as a key positive. They expect healthy volume growth to continue but remain cautious due to the stock's elevated valuation.

• Bank of America (BofA) holds a 'Buy' rating with a target price of ₹1,290. They cited strong domestic demand and potential policy support as key tailwinds, raising their target multiple to 8x EV/EBITDA.

• Morgan Stanley has an 'Overweight' rating with a target of ₹1,156.80, expecting the company to gain market share driven by robust domestic demand.

Summary of Q2 FY26 Financials

Looking Ahead

JSW Steel's Q2 FY26 performance demonstrates its ability to leverage operational strengths to drive profitability even in a challenging price environment. The record production and strong sales volumes underscore the robust domestic demand for steel. While analysts remain watchful of global uncertainties and input cost pressures, the company's ongoing capacity expansions and strong market position in India provide a solid foundation for future growth. Investors will be closely monitoring steel price trends and the ramp-up of new capacities in the upcoming quarters.