JSW Steel Q2 Results Preview: Margin Expected To Contract Amid Softer Realisations, Strong Demand

JSW Steel Ltd. is set to announce its financial results for the second quarter of the financial year ending March 2026, with analysts expecting a mixed performance, as weaker realisations are likely to offset gains from robust domestic demand and steady volume growth.

While analysts see continued strength in India’s steel consumption and improving market share, margins could remain under pressure due to lower net sales realisations and higher input costs.

• Revenue seen 2% higher at Rs 44,171 crore versus Rs 43,147 crore

• Profit seen 21% lower at Rs 1,727 crore versus Rs 2,184 crore

• Ebitda seen 8% lower at Rs 6,938 crore versus Rs 7,576 crore

• Margin seen at 15.71% versus 17.55%

• Bank of America highlights stronger domestic demand, better-than-expected realisations, and potential policy support through higher import tariffs/duties as key tailwinds.

• Additionally, a structural improvement in Chinese steel demand could further stabilise global price dynamics.

• BofA has cut its FY26E Ebitda estimate by 11%, reflecting moderation in margin assumptions due to input cost pressures and normalisation in pricing trends.

• Despite the earnings downgrade, BofA has raised its target price to Rs 1,290, incorporating Ebitda contribution from BSPL and factoring in the company’s expansion plans, which position it well to capture India’s robust long-term steel consumption growth.

• The brokerage has increased the target valuation multiple to 8x, citing strong visibility in domestic demand and sustained capacity additions that enhance long-term competitiveness.

• BofA flagged lower-than-expected steel prices and volumes, a rise in steel imports, and higher input costs as downside risks to its forecast.

• Morgan Stanley expects JSW Steel to gain market share, projecting mid-teens year-on-year growth, supported by robust domestic demand and improved operating efficiency.

• The brokerage anticipates the domestic business to grow by around 17% year-on-year in second quarter, driven by healthy consumption trends and continued strength in infrastructure and construction activity.

• Standalone net sales realisation (NSR) is expected to decline by approximately Rs 3,500 per tonne quarter-on-quarter, reflecting softer export prices and seasonal adjustments in domestic pricing.

• In its optimistic outlook, Morgan Stanley sees an improved global macroeconomic environment supporting higher steel prices and stronger volumes in the medium term. The potential extension of safeguard duties on steel imports would further aid profitability.

• The downside case assumes an unfavourable demand or supply outlook and a weaker medium-term pricing environment, which could weigh on earnings momentum.

• The brokerage highlights stronger-than-expected domestic demand and faster volume growth as key upside risks, alongside higher realisations and a quicker-than-anticipated project ramp-up.

• Risks include weaker price or volume momentum, delays in commissioning new capacity, and higher iron ore costs from auctioned mines, which could pressure margins.

• Jefferies expects net sales to rise 11% year-on-year to Rs 43,900 crore in the second quarter, supported by healthy domestic demand and capacity additions.

• The brokerage’s price target is based on a 10x FY27E EV/Ebitda multiple for the non-BPSL business and a 7x FY27E EV/Ebitda multiple for BPSL.

• Key downside risks include a slower-than-expected ramp-up in volumes and weaker steel prices, which could pressure margins and earnings growth.

• ICICI Securities expects JSW Steel’s standalone and subsidiary Ebitda to be sequentially lower in the second quarter, primarily due to a decline in realisations across key product categories.

• The brokerage forecasts domestic realisations to fall by around Rs 3,000 per tonne quarter-on-quarter, reflecting softer steel prices in both domestic and export markets.

• However, higher sales volumes are expected to partly offset the impact of lower realisations, helping to stabilise overall profitability during the quarter.