Why Jindal Stainless Outlook For FY26 Remains Muted
The key reasons that the company is experiencing weaker profitability is due to the slowdown of government capex and weak exports.
Stainless steel product manufacturer Jindal Stainless Ltd. held an analyst meet over the weekend and guided weak profitability for the fourth quarter and a very conservative Ebitda per tonne guidance for FY26.
The stock was down over 5% in trade on Monday and has fallen around 23% in the last six months.
Management Guidance
In the first nine months of financial year 2025, Jindal Stainless has posted an Ebitda per tonne of Rs 20,800. However, at the analysts' meet, the management stated the total Ebitda per tonne for FY25 would stand around Rs 19,000-Rs 19,500 per tonne. This implies an Ebitda per tonne of around Rs 16,000 in Q4 FY25.
Management stated the key reasons the company is experiencing weaker profitability is due to the slowdown of government capex and weak exports. This has led to the company selling higher volume of products in low margin segments.
The company also guided a conservative 9% to 10% annual growth in FY26, and an Ebitda per tonne of Rs 19,000 to Rs 21,000.
Exports To Recover Later
The key export destinations of Jindal Stainless are Europe and the US, which have reported a demand slowdown over the last two years. This has hurt the company's volume growth, with the export share of the company falling from over 20% in FY23 to less than 10% in Q3 FY25.
Management expects exports to recover only in the second half of FY26. While the company has seen enquiries from the US and Europe, it will wait for another two-three months for clarity to emerge on demand from there.
Capex Delayed
The company is also deferring its downstream expansion by eight-nine months, due to demand uncertainty. This expansion was expected in H1 FY27 with a total capex of Rs 1,900 crore.
Earnings Estimates Cut
Post the management meet, Nuvama Research cut Jindal Stainless' Ebitda estimates for FY25, FY26 and FY27 by 5%, 10% and 13%, respectively.
The brokerage also expects the company's volumes to be in the 2.35 to 3 million tonne range over FY25-26. The stock will remain under pressure in the near term due to earnings weakness, according to the brokerage.
