Jindal Steel & Power Ltd.'s shares fell to an intraday low of almost 14% in trade on Friday, after the company posted weak earnings in the third quarter of financial year 2025.
The steel producer's Ebitda during the quarter missed analysts' estimates by around 3%, the first time in the last four quarters. Weak volume growth also led to a steep cut in earnings for the company by analysts.
What Hurt JSPL In Q3?
Jindal Steel & Power Ltd.'s Ebitda and net profit fell 23% and 51% year on year, respectively in the third quarter.
The company's Ebitda per tonne, a key operating metric for a steel company, fell 27% year-on-year and 3% sequentially to Rs 11,494. The decline in this metric was mainly caused by cost escalation due to lower iron ore production from the company's Tensa mine. This led to the company buying more iron ore from the market, which offset the benefit the company could have got from higher steel prices and lower coking coal prices during the quarter.
FY26 And FY27 Estimates Cut
Post the Q3 earnings, the company saw a slew of Ebitda estimate cuts by analysts. Nuvama cut its volume estimates for the company by 1 to 1.2 million tonne per year. This led to a 13% reduction in the brokerage's FY26 and FY27 Ebitda estimates for the company.
Motilal Oswal cut its Ebitda estimates for the company in the range of 6%-17% over FY25-27, to factor in a weaker-than-expected volume growth outlook.
ICICI Securities cut its estimates for JSPL's Ebitda by 12%-13% for FY25-26.
New Capex Announcement Raises Concerns
The company also announced Rs 16,000 crore of new capex. This comes over and above the previously planned and announced capex of Rs 31,000 crore.
The new capex announcement came as a surprise to the street, with ICICI Securities saying the announcement could be a key deterrent to the stock's performance.
Analysts' Recommendations Revised
In reaction to the weak set of Q3 earnings, some brokerages changed their rating on the stock and reduced their target prices.
ICICI Securities downgraded the stock to a 'hold' from a 'buy' previously, and cut the stock's target price steeply from Rs 1,215 to Rs 870 per share.
While Nuvama maintained its 'buy' rating on Jindal Steel and Power, it cut the stock's target price from Rs 1,292 earlier to Rs 1,097.
Motilal Oswal also reduced its target price to Rs 960 per share.
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