JSW Steel Q2 Preview: Topline to be stable, but lower realisations to hit profit

Analysts recommend monitoring management's comments on sales prices and the expected trajectory of coking coal costs.

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26 Aug, 2025 12:21

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In its results for September quarter scheduled to be declared later on October 20, JSW Steel Ltd is likely to report a stable revenue but a drop in net profit. While its Indian operations are expected to perform well, the steel maker may report weaker results from subsidiaries.

According to estimates put up by 10 brokerages Moneycontrol reviewed, the company's revenue is projected to inch up 1 percent to Rs 42,428 crore both sequentially as well as annually. However, its net profit may dip 7 percent to Rs 2,177.70 crore from the previous quarter. The company had reported a loss of Rs 848 crore in the same quarter last year.

Analysts anticipate a 7 percent increase in volumes and a 6 percent decline in realisations, and an improved EBITDA on the back of higher volumes, reduced cost of coking coal, and better fixed-cost absorption. EBITDA will be at Rs 7,346 crore, up 320 percent from a year ago, while 4 percent on-quarter.

According to ICICI Securities, JSW Steel's Indian business volume would grow by 5 percent QoQ with improved margins due to positive price-cost dynamics. Subsidiary performance, however, is likely to remain subdued. Coated products might face challenges due to a narrower CRC-HRC spread, and US subsidiaries could experience inventory losses amid falling HRC prices, it said.

During the quarter, long steel prices dropped significantly by around Rs 3,000 a tonne QoQ, while flat steel decreased by about Rs 900 QoQ. Average coking coal costs are projected to decrease by around $45-55 per tonne QoQ in the second quarter of FY24 due to a lag effect, and iron ore costs would be down by around Rs 400 QoQ.

Nuvama Research predicts that JSW Steel will see an EBITDA-per-tonne increase of Rs 1,229 QoQ, mainly driven by higher volumes - up 9.5 percent QoQ to 5.4 million tonnes - but this will be partially offset by a 4.4 percent on-quarter decrease in realizations, with some relief from reduced iron ore costs and coking coal costs.

Analysts emphasise that for ferrous companies, the recent rise in coking coal costs has affected profit margins. They recommend monitoring management's comments on sales prices and the expected trajectory of coking coal costs.