MSP Steel returns to profit as quarterly revenue rises 19%

MSP Steel & Power Limited reported standalone net profit of Rs 34.469 crore for the quarter ended September 30, 2026, compared with a Rs 74.7708 crore loss a year earlier, as revenue from operations increased 19% to Rs 806.985 crore and the prior-year Rs 100.883 crore exceptional charge did not recur.

How did MSP Steel return to profit in Q2?

MSP Steel returned to profit through higher earnings before exceptional items and the absence of the charge reported in the September 2025 quarter. Profit before exceptional items and tax rose to Rs 46.4008 crore in the quarter ended September 30, 2026, from Rs 0.3807 crore a year earlier. With no exceptional item in the latest quarter, profit before tax was Rs 46.4008 crore, against a Rs 100.5023 crore pre-tax loss in the comparable quarter.

Net profit was Rs 34.469 crore, compared with a Rs 74.7708 crore loss in the September 2025 quarter. Total comprehensive income was Rs 34.6769 crore, reversing a negative Rs 74.919 crore a year earlier. Basic earnings per share were Rs 0.61, compared with a loss per share of Rs 1.32; MSP Steel said quarterly earnings per share are not annualised.

The year-on-year change was not only an exceptional-item comparison. Revenue increased by Rs 130.1203 crore, while total expenses increased by Rs 83.358 crore, resulting in a Rs 46.0201 crore increase in profit before exceptional items and tax. MSP Steel identifies manufacturing and trading of iron and steel products as its single primary business segment, so it did not disclose separate product-line results.

Did MSP Steel's revenue growth continue from Q1?

No, MSP Steel's Q2 revenue was higher than a year earlier but lower than the preceding June 2026 quarter. Revenue from operations was Rs 806.985 crore in the September quarter, down from Rs 826.5165 crore in the June quarter. Total income similarly declined to Rs 807.4045 crore from Rs 829.0718 crore, while other income fell to Rs 41.95 lakh from Rs 2.5553 crore.

Profitability improved sequentially despite the lower revenue. Total expenses fell to Rs 761.0037 crore from Rs 799.2485 crore in the June 2026 quarter, and profit before exceptional items and tax increased to Rs 46.4008 crore from Rs 29.8233 crore. Net profit rose from Rs 21.9652 crore in Q1 to Rs 34.469 crore in Q2, while basic earnings per share increased from Rs 0.39 to Rs 0.61.

For the half year ended September 30, 2026, revenue from operations was Rs 1,633.5015 crore, compared with Rs 1,387.7261 crore in the corresponding prior-year half. Half-year net profit was Rs 56.4342 crore, reversing a Rs 56.9291 crore loss. The latest half year had no exceptional item, while the prior-year half included a Rs 100.883 crore exceptional charge.

What expenses and tax items affected MSP Steel's earnings?

MSP Steel's cost of materials consumed rose to Rs 606.144 crore in Q2 from Rs 546.7454 crore a year earlier, remaining its largest expense line. Other expenses increased to Rs 89.5162 crore from Rs 86.2618 crore, employee-benefit expense was Rs 23.5511 crore, finance costs were Rs 11.1024 crore and depreciation and amortisation were Rs 14.562 crore. Purchases of stock in trade increased to Rs 8.306 crore from Rs 83.35 lakh.

The Q2 tax expense was entirely deferred tax of Rs 11.9318 crore, with no current tax expense reported. In the September 2025 quarter, MSP Steel reported a deferred-tax credit of Rs 25.7315 crore, which reduced the reported loss following the exceptional item. For the six months to September 2026, deferred-tax expense was Rs 19.7899 crore, compared with a deferred-tax credit of Rs 22.0411 crore in the previous corresponding period.

Note 6 states that MSP Steel claimed an income-tax deduction of Rs 188.2326 crore for interest liabilities after optionally convertible debentures were converted into equity shares during FY2024-25. Based on an independent tax opinion obtained by management, MSP Steel recognised a deferred-tax asset of Rs 47.3737 crore in FY2025-26. The statutory auditor drew attention to this matter and said its review conclusion was not modified.

What changed in MSP Steel's balance sheet and cash flow?

MSP Steel's total assets were Rs 1,653.3112 crore on September 30, 2026, down from Rs 1,723.543 crore on March 31, 2026. Inventory declined to Rs 457.5171 crore from Rs 585.629 crore, while capital work in progress increased to Rs 72.5226 crore from Rs 18.1525 crore. Property, plant and equipment fell to Rs 754.3694 crore from Rs 780.9258 crore.

Total equity increased to Rs 1,084.1682 crore from Rs 1,027.3183 crore, including other equity of Rs 517.3716 crore against Rs 460.5217 crore at March-end. Current borrowings decreased to Rs 275.965 crore from Rs 310.1502 crore, while non-current borrowings were Rs 32.5551 crore at September 30 compared with nil at March 31. Trade payables to creditors other than micro and small enterprises declined to Rs 166.0377 crore from Rs 301.8324 crore.

Net cash generated from operating activities in the half year was Rs 79.1775 crore, compared with Rs 100.8254 crore in the previous corresponding half. MSP Steel used Rs 55.2784 crore in investing activities, compared with Rs 33.8346 crore a year earlier, including Rs 61.8323 crore for purchases of property, plant and equipment including capital work in progress. Cash and cash equivalents were Rs 278.88 lakh at September 30, down from Rs 3.7033 crore at the start of the financial year.

Conclusion

MSP Steel's Q2 turnaround reflected both higher operating earnings and the absence of the prior-year exceptional charge. Revenue increased by Rs 130.1203 crore year on year, profit before exceptional items and tax rose to Rs 46.4008 crore from Rs 0.3807 crore, and the company moved from a Rs 74.7708 crore loss to Rs 34.469 crore of net profit.

The disclosed matters to watch are the utilisation of the deferred-tax asset, which stood at Rs 32.3265 crore on September 30, 2026, and capital work in progress, which increased by Rs 54.3701 crore during the half year. Management recognised the earlier tax benefit on the basis that sufficient future taxable profits were probable, while the auditor specifically drew attention to that accounting matter.