Ladies and gentlemen, good evening and welcome to JSW Steel Limited Q4 FY 2026 earnings conference call. As a reminder, all participant lines will remain in listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. With this, I now hand the conference over to Mr. Ashwin Bajaj, Group Head of Investor Relations. Thank you and over to you.
Thank you, operator. Very good evening, ladies and gentlemen. Welcome to JSW Steel's earnings call for Q4 and financial year 2026. We have with us today the management team represented by Mr. Jayant Acharya, Joint MD and CEO; Mr. GS Rathore, Chief Operating Officer; Mr. Arun Maheshwari, Director of Commercial and Marketing; and Mr. Swayam Saurabh, the CFO. We'll start with opening remarks by Mr. Acharya and then open the floor to Q&A. With that, over to you, Mr. Acharya.
Yeah. Thank you, Ashwin. Good evening, everyone. FY 2026 was a transformational year for JSW Steel, marked by strategic joint ventures with global steel majors, progress on steel making and downstream capacity expansions, enhanced raw material security, and significant balance sheet deleveraging. In December 2025, we took a very important strategic step of advancing our long-standing partnership with JFE Steel of Japan. We announced a 50/50 joint venture with them for our BPSL steel business. The transaction has progressed as scheduled, with the JV entity being formed by end of March, and JFE has brought in the first tranche of their equity investment into the joint venture. This transaction entails a deleveraging of approximately INR 37,000 crores for JSW Steel, out of which about INR 30,000 crores has been completed at March end.
JSW Steel's balance sheet has transformed with operational improvements. Our leverage has fallen to 1.81 as on 31st March, and net debt stands at INR 54,000 crores. Our credit rating outlook has seen an uplift, and we expect to see continued progress on this front. As you are aware, we had also been working on a joint venture with POSCO, South Korea. Last month, we have signed a joint venture agreement with POSCO at this India-South Korea summit in New Delhi to set up a greenfield integrated steel plant of 6 million tons in Odisha. This transformation has set the foundation for our next phase of growth. India's continued strong growth in steel demand and our strong balance sheet has enabled us to accelerate the growth plans.
We have been targeting a capacity of 50 million tons, as we have been communicating in India by FY 2031. We are now announcing a target of 62 million tons by FY 2032, which can be achieved through our existing sites. In addition to this, the joint ventures of JFE and POSCO will have a cumulative capacity of 16 million tons by FY 2032, taking the total capacity in India, along with joint ventures to 78 million tons. Including our Ohio capacity of 1.5 million, the capacity would be close to 80 million tons for JSW Steel and the joint venture entities put together. Interestingly, if we just look at the ranking of steel productions, the U.S. at number three and Japan at number four as a country, produce about 80 million tons.
This capacity would bring us to be one of the largest steel producing companies worldwide. During the year, we have announced an acquisition of BMM Ispat in Karnataka, a 0.9 million ton producer of long products, which would complement our product basket of long products. BMM is located at close proximity of about 50 kilometers from our Vijayanagar steel plant. It has land available with expansion potential of 0.9 million ton to be expanded to 1.8 million ton at low specific investment cost. The expansions would focus on engineering specialized steel, and this acquisition is expected to be completed by end of this financial year. Our expansions in 1 million ton in Kadapa and the first phase of 5 million ton at JSW Utkal, which we announced last year, are progressing on track.
We are announcing a further 5 million ton expansion at Vijayanagar, which will take the Vijayanagar steel plant capacity to 25 million tons, making it the world's largest single location steel plant. Our growth strategy also focuses on value-added products, and during the year we have announced several downstream projects across our various sites in order to maintain our share of VSP over 50%. We have also taken big strides to enhance our raw material security. We have completed the acquisition of Minas de Revuboe mines in Mozambique. We have increased our effective interest in Illawarra Metallurgical Coal from 20%-30%. On the iron ore side, we have operationalized 1 new mine in Goa, and we have won 1 additional mine in Goa in the last few days.
We had previously stated our target of achieving a 50% captive iron ore integration and 25% captive coking coal by FY 2031 at a 50 million steel capacity. With the MDR acquisition, we now expect to be 50% captive for both coking coal and iron ore by FY 2031. We would also target going forward to enhance our captive to meet the 50% share at 60 million, 62 million tons capacity as well. The last year has truly been transformational. In slide 8 of our presentation, you will see that over the next decade, India will be the key steel market globally. China's steel production and consumption as a share of global demand peaked out around 2020, and is expected to see a gradual decline. Other markets will witness muted growth.
India is going through a nation building phase, with steel being a key building block for growth. This creates a long runway for steel demand to outpace the real GDP growth in the country. India, as the second steel producer and consumer, will continue to increase its share of global steel consumption from about 9% currently to 16% in a decade. We believe production growth is likely to lag consumption growth. JSW's strength and capabilities, including human capital, digitalization and AI, gives us the confidence to grow steadily to meet this Indian opportunity. At the same time, we will stay prudent and focused on creating shareholder value as we have done historically in the past.
On the macroeconomic front, the global economic growth outlook remains resilient, with IMF forecasting global growth in 2026 at 3.1% and the outlook for 2027 at 3.2%. This is despite the world economy facing elevated uncertainty driven by geopolitical events, particularly in the Middle East, which is causing supply disruptions, inflationary risks, increasing the pressure on interest rates. IMF, however, has flagged that prolonged continuation of this conflict could result in an impact on the GDP. Even as global uncertainties persist, India continues to grow, to show strong growth momentum. The forecast by RBI for FY 2027 is 6.9% reflects the strength of domestic fundamentals, with Indian growth demand remaining robust. India has shown resilience in sustaining growth and geopolitical shocks. Such shocks are increasingly becoming the new normal.
Economic activity in India has picked up in the second half of the year, supported by GST-led reforms. Healthy rural indicators, strong credit growth, improving capacity utilization and traction across key sectors continue to support the outlook. At the same time, risks such as energy price volatility and monsoon-related uncertainties needs to be monitored. India's steel consumption also grew at a healthy rate of 7.9% in FY 2026. Due to a large flow of imports in the past two years, we have been a net importer. With the imposition of safeguard duty last year, steel imports have declined and exports have risen, making India a net exporter after two years. Looking ahead, domestic steel demand is expected to grow at a healthy rate of 7%-9% in FY 2027, incrementally adding 12 million-14 million tons of demand.
In China, steel production was down 4.6% in quarter one, outpacing the 4.2% decline in consumption. With production easing and export licensing norms coming into play from January beginning, steel exports, including semis, fell by 8.1% YOY. Looking ahead, a better demand supply balance is expected as China's steel demand is projected to contract at a slower pace than what we have seen in the previous year. JSW Steel's growth continues to be firmly India-centric, reflecting our long-term conviction in India's growth trajectory. Steel is the building block for growth across manufacturing, infrastructure, engineering, energy, and mobility. A strong domestic ecosystem directly contributes to self-reliance while also creating an opportunity to build further resilience and self-reliance in the country.
Our growth strategy continues to focus on disciplined capital allocation, efficient execution, technology, and digitalization to create sustainable value for all stakeholders. On sustainability, we were included in the S&P Global Sustainability Yearbook, earned the top 1% emblem globally across industries, and we are ranked number 1 in the global steel sector. We have commissioned 1 GW of renewable capacity with a total 2.5 gigawatt approved by our board, along with 320 MW of battery storage. We also deployed India's first electric locomotive for captive logistics at Vizag. On the update of our projects, just to give you a brief overview, at Vizag, the BF3 expansion from 3-4.5 million is currently under testing and commissioning. The ramp-up is expected to add incremental volumes from Q2 onwards.
At Dolvi, the phase three expansion from 10 to 15 million ton is moving ahead as planned, with civil work equipment erection underway and targeted for completion by September 2027. At JSW Utkal in Odisha, the two pellet plants will be commissioned by FY 2028. The first phase of 5 million steel capacity will be commissioned by FY 2030. The 30 million ton slurry pipeline in Odisha is progressing well and is expected to be commissioned by FY 2027. The 1 million ton structural mill at Kadapa is progressing with equipment ordering underway and commission targeting by FY 2029. We are adding about 3 million tons of value-added capacities while we grow our steel capacities across galvanized electrical steel, tin plate, cold rolling, structural products, et cetera. These projects are progressing well and will be commissioned between FY 2028 and 2029.
In addition, let me give you a little bit of an update on the raw material side. On iron ore, we have 25 iron ore mines, out of which 13 are currently operational. We are working on operationalizing the remaining mines, as well as increasing the EC capacity at some of the operating ones. In Goa, we expect to operationalize two more mines by quarter one of FY 2028. As we increase our captive iron ore production, we are geographically optimizing our sourcing, thus reducing our logistics cost and lead times. The 2 million ton iron ore mine at Netramanda, which is now with a joint venture, is now part of the, you know, is being commissioned in the quarter four, increasing the iron ore availability for the joint venture.
On the coking coal front, as we mentioned earlier, Mozambique has the potential to yield 250 million tons of usable high-quality coking coal. The mine will be developed in phases, and the first phase is targeted to be completed by mid-calendar year 2008, producing around 5 million tons of usable coking coal. In addition to the 30% stake in Illawarra, we have three mines and coal linkages in India, which together will provide around 5.5 million tons of coking coal. Along with MDR, we will have approximately 10 million tons of captive coking coal, meeting around 50% of our total coking coal requirement by FY 2031. Coming to our operating performance, Q4 was characterized by strong volume growth and operational performance supported by efficient asset utilization and increased plant reliability due to digitalization efforts across our sites.
This was reflected in the higher capacity utilization for the Indian operations, which stood at 96%, excluding the BF3 shutdown. The downstream capacity utilization also increased in quarter four to 95% that provided us higher VAP volumes. Steel sales stood at around 8 million tons for quarter four and around 30 million tons for FY 2026, driven by improved domestic sales, supported by growing steel demand in India. Our geographic and sectoral mix has improved. Automotive packaging, alloy engineering, sectors have increased. Also, branded sales constituted about 50% of our total retail sales, enhancing the overall value of the volumes. During the quarter, we reduced inventory by 700,000 tons and approximately 100,000 tons over the full year. We achieved 99% of our production guidance and 102% of our sales volume guidance for the year.
Coming to the financial results, our consolidated revenues in quarter four crossed INR 51,100 crores, crossing INR 50,000 crores for the first time. Adjusted EBITDA stood at INR 9,713 crores with an EBITDA margin of 19%, while PAT stood at INR 19,243 crores. It is important to note that there was an exceptional gain of INR 17,888 crores in quarter four. This includes a gain of INR 18,051 crores on slump sale of BPSL steel undertaking and INR 163 crores exceptional charge on implementation of new labor code. The normalized PAT, excluding exceptionals for the quarter, was INR 3,475 crores. In FY 2026, the adjusted EBITDA stood at INR 32,048 crores, and the normalized PAT, excluding exceptionals, was INR 8,700 crores.
We transited from quarter 3 with one of the lowest steel prices, which has improved gradually post the imposition of safeguard duty and strengthened through March. Some part of this price recovery will be realized in quarter 1, FY 2027. On the cost side, we were impacted by higher coking coal prices, which increased by about $16 per ton. Iron ore costs were flattish during the quarter, with one-third of captive iron ore usage in the quarter FY 2026. At our overseas operation, Q4 performance was better at the plate and pipe mill in Texas. However, the Ohio operations production was impacted as activities ramped up in January 2026 following the caster upgrades and extreme cold weather.
Overall, for FY 2026, the performance of U.S. operations improved significantly, reporting an EBITDA positive of $36 million compared to an EBITDA loss of $35 million in the previous year. The Italian operations also performed well in FY 2026, reporting an EBITDA of EUR 16.4 million versus close to EUR 15 million in the previous year. The BPSL transaction has driven a structural deleveraging and transformed our balance sheet. Our net debt has declined and stood at INR 54,000 crore by the year-end. Our revenue acceptances stood at $2.1 billion. Leverage and gearing have dropped substantially to 1.81 and 0.51 respectively. The second tranche of equity investment in JFE is expected by end June, which will drive further deleveraging of INR 7,900 crore approximately.
We have also revised our stated maximum cap for gearing from 1.75 to 1.25 and leverage from 3.75 to 3. Our comfort level will be to keep the leverage below 2.5. During the quarter, we incurred CapEx of 4,612 crores and 15,600 crores for FY 2026. The CapEx for our approved growth plan is 126,000 crores, which will be spent over the next four-five years. We expect to spend about 22,000-24,000 crores in FY 2027. The JSW One platform, in which we have about 61% equity stake on a fully diluted basis, continued to see strong momentum during the year. In Q4, it turned profitable for the first time.
The steel volumes grew by 50% YoY, and the GMV reached INR 6,200 crores, a 57% YoY increase. Over INR 2,000 crores of this GMV was driven by JSW One's credit offerings. Looking ahead, we expect our coking coal cost to be higher by $12-$15 in Q1. For FY 2027, we expect consolidated steel production at 29.75 million tons and a sale of 28.6 million tons. This includes volumes from BMM Ispat, which is being acquired by us, but excludes volume from our JFE joint venture. We expect the domestic steel demand to grow in the range of 7%-9% in FY 2027. JSW Steel is well positioned to support this growth. We'll be happy to take questions. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question and to restrict to two questions at a time. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We will take our first question from the line of Vibhav Zutshi from JP Morgan. Please go ahead.
Yes. Hi. Thanks for the opportunity, and congratulations on the strong results. The first question was, basically on the raw material security, given, you know, the target of 78 billion tons. Starting with iron ore maybe, while you said the captive mix would be 50%, we have seen, you know, some of the global iron ore majors ramping up iron ore exports to JSW Steel. How confident are we in ramping up, you know, captive mix from 1/3 currently to 50%, and how could be the mix for imports versus domestic sourcing? If you could provide some guidance on that, please.
Hi. I'll answer that. I'm Arun Maheshwari. Regarding the security of iron ore up to 50% for the captive, from the captive sources, we today also we have a 50% EC capacity available for the iron ore within India for our own consumption. Depending upon the logistics ratios, depending upon the proximity, depending upon the other sources available at that particular point of time, we define to use how much we should be taking out from the captive. That's how we decided to take only up to 1/3 of our consumption last year from our captive sources, even though the ECs were available up to 50% of our own consumption. This is how we try to maximize our logistical,
Advantages
advantages at different geographies, because we are located at almost all geography of India. Going forward also, we have continued to participate in the assets of iron ore within India. Recently, we have acquired some more in Goa. We continue to look for something more in south. We have participated in Andhra Pradesh, wherein we have secured out some concessions. Those are exploration licenses, wherein we are doing more exploration. Today we have 13 operational mines and about 12 is under exploration. We will continue to, you know, upgrade, keep on upgrading our captive sources available. We are confident that at 62 million ton of JSW Steel's volume, we will have our targeted volumes of captive sourcing.
Yeah.
Thank you.
The total number of mines, as we mentioned, was 25 with total combined resources of about 1.7 billion tons without the mines which are under exploration right now. Those will add to the resources.
Okay. Okay. Got it. That's helpful. The second question is on the Middle East conflict. You know, we have been seeing that there's a reduction in commercial LPG supply. There's some shortages in natural gas as well. Do you see any risk to the volume guidance if the conflict continues or, you know, those issues are largely resolved in the guidance that you've provided?
Well, yes, LPG, and the gas supplies, LNG has been recently cause of concern because of the Middle East disruption. Our exposure to the gas-linked production is very limited in the overall production. It does have an impact on the cost of production. We have ensured and we continue to ensure that there won't be any production disruption by virtue of non-availability of gas, unless it becomes too severe in coming months.
Our portion to the gas linked steel production is very less.
Okay. Thanks a lot. Very helpful. I'll come back with you.
Thank you.
Thank you. We'll take our next question from the line of Amit Dixit from Goldman Sachs. Please go ahead.
Hi. Good evening, sir, and congratulations for a good performance. A couple of questions from my side. The first one is on the realization. Now, given that realizations have gone up and spot realizations have gone up much higher in last quarter, what kind of realization increase do we expect going for, I mean, in Q1? If you consider that, you know, the prices are remain at the current level. I mean, considering the contracts that you might have and other things.
Yeah, Amit, you're right. The since the increases have happened between January to March gradually, part of the increase is reflected in our quarter four numbers, and the balance increase will be reflected in quarter one. In the quarter four, our NSR has moved up by about INR 3,800 per ton. We would see the balance of the price increase play out in quarter one.
Sir, possible to quantify the balance?
Difficult to give a number because it will depend on, again, the product mix, you know, and it will also take into account a seasonal number. I think we expect that after covering the cost, because the cost also will go up. My senses or our senses are the cost will go up in the range of INR 3,000 or so per ton. The margins will still be positive after covering the cost. The price will cover the cost and add to the margin.
Great, sir. Understood. The second one is essentially on the expansions that we have announced. Now, most of our expansions are flat focused. You know, in the country traditionally we have seen longs demand outpacing flats. Any thoughts around longs expansion as well? I know you've mentioned one of the acquisitions that you have done. Apart from that, are we planning to get active in longs as far as downstream expansion is concerned?
In the last announcements, if you recall, we have announced that the Kadapa section mill, which is a structural mill which would go for beams and the expansion at our Raigarh facility, which would have beam and rails. Those will be in long products. In the beam facility, which we have, you know, just approved at the board for acquisition, which is a 1 million ton long facility, would be expanded to about 1.8 million ton. That would also be in special engineering steel product. Yeah, these would add to the long product capacities which we currently have. We believe that, you know, India, with the infrastructure growth, would require long products and these would help in meeting those demands.
Okay. Fair enough. All right. Thank you, sir.
Thank you. Next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Good evening, and thanks for the opportunity. Just I wanted to understand the thought on growth going ahead. Earlier, in the past, we've seen that usually you have taken one project at a time. Given that now you are indicating taking on multiple projects, is it now the new normal or should we look at the business now as three balance sheet, one standalone, one JFE JV, and one POSCO JV, for all your growth programs going ahead?
From JSW Steel's perspective, if you see the slide which we have already given to you, that by FY 2030 JSW Steel alone will be at 49 million tonnes approximately. Can I see that slide, please? 49 million tonne, and on top of that we would have the joint venture of JSW JFE, and including Odisha will be close to 55 million tonnes by FY 2030. The expansion of JSW Steel alone up to FY 2032 would be to 62 million. What you would track for JSW Steel will be the 62 million tonnes. On top of this, we have 10 million tonnes as we expect from the joint venture with JFE in the existing site and a 6 million tonne new facility at POSCO. Those would be tracked again separately.
Once Dolvi gets completed, we will have two sites, Paradip and Vijayanagar. 01 site normally.
Yeah. Yeah. Mr. Rathore is just adding that stat.
Yeah. The Dolvi will get over, in another one year or so. This year we'll start Paradip and Vijayanagar. We'll have two sites in zero one site, each 5 million.
Yeah.
That's the target we have taken.
No, my question was more longer term. What I was trying to understand is like usually in the past you have taken one project at a time and then moved ahead. So is this now a new normal that you'll be taking up multiple projects through the JV structure that is in place now?
As we had, you know, given you an indication earlier that the idea of the JV was to strategically grow faster in the country, while it helped us to deleveraging as well. We'll have a double engine of growth. One which JSW Steel will grow on, and the other which the joint venture will grow on. We have also, you know, we have given you an indication that India is the fastest growing market, and this is the right time to be able to take this opportunity and grow faster. That's the idea. Your answer is yes. We would be expanding faster along with the joint ventures.
Right. Given that the pace of growth is going to be so high, like is there a plan to also kind of export, I mean, larger part of these volumes than what we are doing currently then?
Yeah. Can you just repeat that one? Sorry, I missed that.
Given that the pace of growth at JSW, including JV level, is going to be quite accelerated with like multiple capacities being done, is there also plan to essentially raise exports to a much higher % than what it is today in the current portfolio?
We don't, you know, we don't see the need as of now. The way, you know, it is structured, I think you will see probably more of domestic alignment. It's possible that when the capacities incrementally maybe come up in the first one year or two years you have a slightly higher export, but then, come down. Having said that, I would like to say that our Paradip facility, which is on the port, would be the natural place to export from. So the exports from Paradip will naturally be higher than other sites. Given the domestic growth, as we have reiterated earlier, our feeling is that this capacity will be required to meet the domestic growth, which we are seeing today.
If you're looking at a number of 230 million tons by the end of this decade and going beyond thereafter, unless capacities are put in place, I think India will not be able to meet this demand. I also mentioned a line, I think we believe that capacities are going to follow demand, and there will be a lag in the medium term up to 2030. Any capacity which you set up today takes four-five years minimum. When you start a project, keep that in mind. We are quite confident that, you know, with our faster pace of execution and low specific investment cost, we are well-placed to, you know, grow in India.
We are quite optimistic that this is in line with the growth and not in excess of the growth.
Got it. Last data question?
Amit, I request you to join back the queue, please, as we have participants waiting for their turn. Thank you. Next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, good evening and thanks for the opportunity. My first question is, with respect to our JV with POSCO. I just want to understand better what is the rationale and what value does the new JV partner brings, given that we already have a very strong balance sheet after the pre, JFE deal, and we also have a lot of expertise, access to expertise in value-added products, et cetera, given our association with JFE. Just some color on this. Thanks.
There are two reasons. One is that, you know, both JFE and POSCO are leading global steel companies, and both have their strengths on technology. There are certain strengths which JFE we have been able to get along with JFE into India, CRGO being one of them, and we have collaborated with them on many areas of improvements, and we'll continue to do so. POSCO also has their own areas of technology and especially in the, you know, high-strength steels, Giga Steel, which, you know, would go for lightweighting, replacement of aluminum, hydrogen technology to reduce emissions, digitalization and AI. I think those are areas of cooperation between POSCO and us.
In addition to that, POSCO has a 2 million ton cold rolling facility in Maharashtra, and they would like to integrate backwards with a steel plant. One of their criteria for looking for a steel plant in India has been to have a backward integration of the steel from their own facility. These are the two reasons.
That is largely because POSCO Maharashtra they wanted to have localization for sourcing. That is one of the primary reason even POSCO wanted to come to India.
Yeah. Going forward, they want to buy, rather than sending it from Korea, they want to buy more steel from the local facility in India.
Understood. Just to harp on this topic a bit more. One is, I mean, how does a existing JV partner view association with new global players? Is there a potential conflict in future? I mean, further down the line, we'd have three large plants supplying flat steel from Odisha. Will we have a different sales strategy, different targeted downstream products across the plants, or they will just compete like independent plants?
We do not foresee any conflict between the JV partners, per se. They will have their own strategies for sure, because they'll be different legal entities. We see, as we mentioned, the growth of India is strong and therefore, will enable all the entities to grow. POSCO Maharashtra, as I mentioned, is a 2 million ton basically a captive demand for the POSCO facility which will come up. Keep that in mind as well. That will be supplying basically 1/3 of their total new capacity to the downstream facility.
Got it.
Thank you.
My second question is.
Mangal.
Okay, can I go for a second question?
Yeah, please go ahead.
Yeah. Just, I mean, on a broader level, just want to understand, given the overall macro issues in the country and the pressure on inflation, do we see any risk of some withdrawal of protection given our domestic prices are enjoying 20% kind of higher prices due to the protection? Just some thoughts here, sir.
I think we, if you really look at protection, I would say India is probably one of the more balanced countries with respect to protection as you see it worldwide today. We are seeing protections between 25%-50% in various parts of the world. Every country is trying to safeguard their shores from any kind of trade flows which can be adverse for that country, that is becoming very critical to the supply chain resilience of that country. In India, with the 11.5% safeguard duty, I think we are far lower than what the rest of the world is. That's number one. Number two, your comparison is with the lows of December. I would not do that three years back, in April 2023, we had the same price as we had in April 2026.
The cost environment was similar if you were to look at coal and iron ore. On top of that, the depreciation of the rupee has been severe. Please look at the fact that your cost on account of the overall ecosystem has gone up. You have just come back to where you were three years back. I would say this more of a price correction and to make it a viable price system today. From international price perspective also, I think we are now well-balanced.
Yeah.
We do not think that we are very much off the international prices as we see today. If you look at, you know, if by and large the Western economies, if you were to look at Europe and U.S. Europe is already in the range of $830 odd, of hot-rolled coil, and I think U.S. is close to $1,100 per metric ton of hot-rolled coils. Japan also and Korea also, internal prices are higher. We are price point of view also more balanced in India.
Got it.
Thank you.
That's very useful. Thanks and all the best. Yeah.
Next question is from the line of Pinakin from HSBC. Please go ahead.
Thank you very much, sir. My first question is, if you look at the CapEx guidance of INR 1,26,000 crore over the next four-five years, that clearly does not capture the entire 30 million tons JSW Steel expansion and the 10.5 million tons at the JV. If you take a step back, can you give us a broad range of the CapEx over the next five-six years to go from the current capacity base to 78.5 million tons capacity base and includes downstream mining, everything?
Currently, as we have given you the capacity expansion plans, our CapEx plans are at INR 126,000 crores as of now. Incrementally to be at 62 million plus invest for equity for the joint venture and our mining other investments, downstream facilities. Our sense is that we would require another INR 100,000 crores between now to FY 2033. Because FY 2032, if we try to plan a capacity, the payment would spill over at least to the next year. You have about six-seven y ears in which you would spread this CapEx.
sir, just to understand clearly, this 126 plus another INR 1 lakh crore, so INR 226,000 crore over the next, let's assume six-seven years, right? FY 2027 is at INR 22,000 crore. the way we should look at it that, in the coming years the annual run rate of the CapEx will go from the INR 20,000s to the INR 30,000s, INR 35,000 crore a year in the next couple of years as the project, the multiple projects, pick up pace?
Yeah.
Yeah.
Yes. As, if this is including the joint venture projects, including the mining which we would, you know, additions which we would do in Mozambique, including our own 62 million tons. It's a combination of all of them. Yes.
Got it. Sir, my second question is if I look at the guidance, right? If I strip away BPSL from this year's base, it implies roughly 9%, 9.5% of production growth in FY 2027. Given the timelines of the project commissionings that we have in terms of Dolvi, Vijayanagar, is it fair to say that this is the broad 8%-10% CAGR that we can look at for the next three-four years?
I think if you see the guidance which we have given, if I recall, we have given a guidance of 29.75 million tons, which on a like-to-like basis is a 13% growth in production. A guidance of sales at 28.6 million tons is a 10% growth. Going forward, the capacities, as you know, we are getting in capacities of Vijayanagar and Dolvi put together, which would add about 7 million tons of capacity between now to September 2027. The Utkal facilities which have been taken up and the Vijayanagar facilities for expansion of another 10 million tons, et cetera, which has been taken up, would be there by FY 2030. Those will provide, each of them will provide incremental EBITDAs for the next phase of growth.
Got it. This is very helpful. Thank you very much, sir.
Thank you. Next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead. Pallav, your line is unmuted. Please go ahead with your question.
Yeah, good evening sir. Am I audible now?
Yes.
Yeah. First question was on BMM Ispat. You know, I think, can you just share what was the actual production and, you know, EBITDA number in FY 2025 for this company?
I think we'll request our investor, you know, team, you can reach out to them and take the details. I don't have it off the cuff right now.
Sure, sir, because, you know, I think the.
It's a facility of 0.9 million tons. Just to give you an overview. 0.9 million tons, I would say we would produce in the range of 0.8 million tons in this financial year.
Sure, sir. Also, you know, if I look at the net worth, you know, I think, probably it's worth about INR 2,700 crores as per the, you know, the press release on the stock exchange. We've acquired it for about INR 6,500 crores. That's close to almost three times, you know, on a price to book basis. Is this factoring in the future expansion that can happen with it?
No. The current price at which this is acquired represents multiple approaches, discounted cash flow as well as replacement cost. It's roughly a 1 million-ton plant. Also, the fact that it has a blast furnace which is very new, which was commissioned only last year. And if you take a normative EBITDA per ton of plant of this size, you will realize that the effective EV/EBITDA is significantly attractive. Plus the fact that this has potential to expand capacity almost double from here in fairly short period of time. All of these factors, but the valuation we believe is fairly attractive. Plus the synergy with our Vijayanagar location, which is very close to it.
Yeah. On an expanded basis, you're right that, you know, this gives us the additional headroom because we feel the next 1 million or 0.9 million ton can be expanded between INR 1,600-INR 1,800 crores, making the overall investment very attractive.
Sure, sir.
Thank you.
Nothing to do with
Pallav, I request you to join back the queue, please.
Okay.
Thank you. Next question is from the line of Parthiv Jhonsa from Anand Rathi. Please go ahead.
Thank you for the opportunity and congratulations on completing the JV and further strengthening the relationship with the partners. I have two questions. The first question is pertaining to the steel prices. Considering, you know, just couple of days back or very recently, you know, a couple of companies from Vietnam, China have taken substantial price hike. Also, you know, your price in Europe and USA are at reasonably high level. Just wanted to check if you can just give a number of what can we expect as far as your price increase in quarter one and, say, H1 going forward.
In the month of April, we have increased prices, and we have increased some price for flat products in the month of May as well. I think we increased INR 2,000 in April and INR 1,000 in May for flat. Our belief is that for now the price will be range bound. We will watch the geopolitical situation, you know, in the country and then take a view. As of now, we believe this would be range bound going into this quarter.
Just continuing to that question, any contracts from auto which would be done at a much higher prices because, I believe it's at a rolling basis, right?
Yeah, it would. Auto gets recalibrated quarterly, so the price increase for automotive will come in this quarter. The quarterly prices will get recalibrated. Those will be also in this quarter. You are right.
Okay. Any idea on the hike which we can expect from the price from the auto sector?
I will not be able to give you numbers here, but, you know, as we close the things it will come out in terms of.
No problem. My second question is pertaining to the your analyzed CapEx run rate of about INR 30,000, INR 35,000 odd crores going forward, right? I believe though you are very comfortable for say FY 2027 considering would be your production and sales are at about 10%-13% higher on a like-to-like basis and also the prices are good. However, going forward at your INR 35,000 crores of CapEx on analyzed business, would you start, you know, opting for more debt? Because for in the near term, I think your cash flows might not match, if I'm not mistaken.
This is Swayam here. If you factor in the capacity, incremental capacity which are going to be available fully from now till next 1.5 years, and that includes JVML, which is not at full capacity yet in FY 2026 can do 1 million more. BF3, which is going to start production once the capacity upgradation is completed, that will give 2 million more. Dolvi Phase three, which we expect to come in FY 2027. CY 2027. These three put together creates almost 8 million tons of extra production, which will create anywhere between, you know, INR 9,000 crore-INR 12,000 crore of EBITDA, which is not in my base today.
If you take that out, you'll realize that even if as a company we stretch to INR 30,000 crore-INR 35,000 crore of CapEx spend, a part of it is going to get funded with the new cash I will generate. If you exclude that, you'll realize that it's from the base, the kind of cash we are creating. We are not going to create very large stress to increase debt. Of course, temporarily debt could still go up. Given where we stand right now, which is at 1.8 net debt to EBITDA, and our expectation is this leverage in FY 2027 perhaps will go slightly better, especially after second tranche of JFE. We think we'll be very comfortable.
Um, so my basic-
And-
My understanding was.
Yeah.
Yeah, go ahead, please.
Yeah, yeah. Just my quick understanding was that Dolvi is expected in CY 2027. The incremental benefit would be only from 2029 onwards, right? I think for 2028 and 2029, that is what I wanted to understand. These two years there would be some increase in debt, right? If I'm not mistaken.
No, not really because, you know, you will have JVML which will start, which will actually produce entire 5 million in FY 2027.
Okay.
You will have BF3, which will have some positive uptick in FY 2027, not fully. That would come in FY 2028. In FY 2028 you will also see Dolvi's part volume. Could be small.
Okay.
This combined will create incremental cash which you are not seeing in our base yet.
Without Dolvi, just to sum up, it's 4 million tons at least you will see, you know, between now to FY 2027, including the BMM volume. That will give you additional cash flow till Dolvi comes in. Dolvi will start kicking in, let's say, after, let's say October 2027, to December 2027 quarter they will start, let's say, operations and then ramp up capacity.
Thank you. We'll take our next question from the line of Shubham Jain from Nippon India Mutual Fund. Please go ahead.
Yeah. Hi, sir. Good evening. Congratulations for the good performance. My first question is, can you help us understand the current raw material consumption norms from the Indian operations, like specifically for iron ore and coking coal for per ton of steel? Also within your cost of goods sold, roughly what % is attributable to iron ore, coking coal?
Percentage utilization or the ratio of utilization of iron ore and coking coal is purely depending upon what grade of iron ore we are using and which location and which technology we are using it to. So, typically, if I have to say then it is about 1.8-1.9 per ton of steel is what the iron ore consumption would be. Coking coal, if I had to consider purely coking coal, it just is about 700 kgs per ton of steel. This is a typical ratio what we have, only coking coal. If you have to add all the coals, it becomes about 900, 950 kgs, depending upon the process what we are getting into.
Okay. Roughly what % is attributable to iron ore and coking coal in costs?
It keeps changing or depending on because both are cyclical in nature, I would say only about 60% or 60% put together is the cost, of, cost share of iron ore and coking coal.
Okay, sir. I have one more question.
Thank you, Shubham. I request you to join back the queue, please, as we have participants waiting for their turn. Thank you. Next question is from the line of Indrajit Agarwal from CLSA. Please go ahead.
Hi. Thank you for the opportunity. My first question is on the export. As you said, that more and more global economies are getting closed. If at a point in the next two years we have a temporary overcapacity in flat steel in India, which geographies do you think we can still have a market?
No, actually, you know, we have, we have modeled the overall flat demand in India. By and large, if you see flat has been growing at a slightly faster pace, in general over the past few years. We see that flat demand will increase. The entry barriers for flat capacity setting up is more. Therefore, in the medium term, maybe between the years of 28 to 30, I see that supply will lag demand. Going forward, you know, if you really look at the overall thumb rule number, if we are incrementally generating about 12 to 14 million tons of incremental demand, roughly about 6 to 7 million tons of flat steel would be the incremental demand.
That means you will require to set up at least two hot strip mills, because each hot strip mill takes almost two years to fully play out. At least two hot strip mills should come every year for you to be able to meet that demand. I do not foresee too much of a problem in the planning which we see. There could be some year, as you mentioned, where if there is any clubbing of capacities which come, then certain amount would be exported, which is fine. As I mentioned, our Odisha facility is on the port, and that can leverage exports into, into the world. We also have opportunities of supplying some green steel to the world.
As you know, we have said that Salem would produce low-carbon emission steel from natural gas and DRI and renewable energy. That is a natural export model. The third one is that we see that there is a gap in slabs also, which is required internationally. The traded slabs internationally has come down post the Russia, Ukraine and Iran conflicts. There is a space which has been created in that. That's the third opportunity for exports, which is there.
Sure. My second question is actually a bookkeeping question. If you can highlight how much is the iron ore cost increase, for 1Q, and what is the tax incidence of the BPSL deal?
The iron ore cost have gone up in the last few weeks. We are trying to reduce, and we are trying to do the blending in a manner so that the specific consumption is better. With that, we will try to moderate the impact of the price increase. It will be slightly higher, but not much from quarter four to quarter one. As far as the bookkeeping question is concerned on the BPSL tax, something which you asked, Sam, can you repeat that part?
Tax incidence on the BPSL. Yeah.
Incidence on the BPSL. Got it.
Is there any tax implication? Yeah. Yeah.
BPSL has had carry forward losses, unabsorbed depreciation. The effective tax on this transaction is significantly lower. Those losses were fully utilized.
Even on JSW books?
Correct. On JSW books.
All right. Thank you. That's all from my end.
Thank you. Thank you. We'll move on to our next question from the line of Ashish Jain from Macquarie India. Please go ahead.
Hi, sir. Sir, good evening. Sir, my first question is, you know, on pricing. You know, you made a point earlier that, you know, current prices are still where we were in 2023. If I see that in context of, you know, China exports, assuming the China exports drive prices directionally, they were much lower in 2023. How should we think about pricing going ahead? Have we come to a point where, you know, pricing is more local, you know, irrespective of the safeguard duty? Have we come to that point yet, do you think?
No. I don't think price will always be what is internationally available, and that has to be taken into account. I don't think you can ignore that. Just to give you a number, because we were just going into this, as an analysis from our side. China prices, you know, in the international market, in, let's say, April, May, was in the range of, you know, $550-$560 FOB. It was actually slightly higher than what it is today. Today, it's, let's say, in the range of $510 FOB. On the cost side also, you will see similar structures. India, at that point of time, hot-rolled coils, coil prices were in the range of INR 60,000. You can do your math. I think, we are not very far from this basket.
That's why I compared April 23 to April 26. International prices will always be a guiding factor for the domestic steel prices.
Right. Right. Right. Okay. Secondly, you know, in terms of the demand, you know, you clearly are very positive in demand. Is it possible to give some color in terms of which are the key sectors, segments where we are most optimistic on demand? If you can, you know, give some granular color on that.
You know, the way infrastructure and construction naturally contributes to a very large part of the overall steel consumption, and that's growing at a very healthy rate. Automotive, if you see from what was expected when we began this year to what we entered this year, automotive growth has been really good. Automotive capacity announcements by major auto producers in the country is also a very healthy number. You know, we are seeing similar kind of traction in the renewable energy sector and similarly in, you know, appliances and others. If you were to sum up infrastructure, manufacturing including automotive, renewable energy. These are moving at a fast pace.
Anything on railways?
Ashish, I request you to join back the queue, please, as we have participants waiting for their turn. Thank you. Next question is from the line of Rashi from Citi. Please go ahead.
Just a question. You had mentioned that the cost increase sequentially is expected to be about INR 3,000. Apart from coking coal, where all are you expecting the increase?
Yeah, coking coal, our expectation is between $12-$15.
Yeah. The large part of the increase would be somewhere around, the exchange rate is for sure one of the cost element. The sea freight has gone because there's a large part is seaborne trade also for us, whether it's the import of coking coal or other coal or coastal movement. That impacts. The fluxes because the Middle East is one region where all the fluxes are coming. That gets impacted and the damage incidences are increasing there.
Yes. Yes.
Our exposure to gas is just about 5% to 6% of the total production volume. It won't impact much to us. Still, in the civil, we generally get impacted because of the gas prices.
On account of iron ore, maybe, we factor 5% quarter four to quarter one on cost.
When you say the exposure to gas is 5%- 6%, 'cause my understanding was that the gas impacted mostly your downstream production. Is there any upstream exposure as well?
No.
Dolvi, you're talking about natural gas exposure, right?
Yes. Yes.
Natural gas exposure when you, natural gas exposure to downstream is not there.
is basically used in Dolvi in our operations to some extent. As Arun explained, it's a very small % of our overall requirement. Downstream uses a little bit of LPG, but we have been converting to different fuels.
Yeah.
Yeah. Therefore, we are able to mitigate some part of the impact of the LPG pricing.
Yeah.
Thank you.
We are using liquefied natural gas.
Understood.
Thank you. Next question is from the line of Ritwik Sheth from Anand Rathi. Please go ahead.
Hi. Good evening, sir. A couple of questions. Sir, what will be the share of our JV investments in this INR 250,000 crore?
For the JV investment, they.
Which is-
First of all, as I said, INR 126,000 crores plus at the most another INR 100,000 crores. It could be a little lower, at the most another INR 100,000 crores. The JV investment will only be in form of equity.
Right.
If you typically take a project which we are doing, let's say, we are doing BF6, for example, right now in JV, Vijayanagar, for which the expansion which we have just announced, INR 26,000 crores. If you were to take that as a benchmark between INR 25,000-INR 30,000 crores, equity would be for any project of this, it would be about INR 8,000-INR 10,000 crores. In a project, like this, our share of the equity would be close to INR 4,000-INR 5,000 crores in each of these projects. That means two projects multiply by two.
Sure. Got it. Sir, what is the outlook for the overseas subsidies for FY 2027?
FY 2027, U.S. operations have, you know, the vacuum degassing modification and our caster modification for dynamic soft reduction has taken place. They are in the process of stabilizing. That will enable them to produce higher grades. One that is value accretive. The volume also which we lost on account of the shutdown at Ohio upgradation, that will come back. Baytown upgradation is getting completed, and that should start operations in quarter two of this financial year, by the end of quarter two of this financial year, and gradually ramp up. These two combined will give you a better profitability going forward in the U.S. operation. Italy also, the sales volumes are likely to be better.
Yeah.
Okay.
Sales volume will be better and the product mix and the market mix is, looks to be much better this year. We would get a better, overall EBITDA financial performance over there.
Overall, both assets will show better performance vis-à-vis FY 2026.
Okay. Got it. All the best.
Thank you.
Thank you. Next question is from the line of Jashandeep Singh Chadha from Nomura. Please go ahead.
Hi. Thank you for the opportunity and congratulations, you know, for a good set of numbers. My first question is in line with, you know, one of, you know, participant have earlier asked. Just wanted to put the net debt again into context. Asking in another way, sir. In the near term and in the sustainable, you know, how do you, how do JSW Steel look at its leverage? How much is management targeting the net debt to EBITDA in the near term and also sustainably? Just wanted to understand the peak debt and, you know, sustainable debt, what will be.
I think, when Jayant, in his opening speech, did mention it, we have revised our upper limit headroom from 3.75 down to 3 net debt to EBITDA. That basically means we are much more comfortable, even while we are in this CapEx journey. Instead of giving an absolute net debt number, our preference will be to track the leverage ratios.
We are, as I said, we are hopeful of a lower net debt to EBITDA numbers. Therefore, we have revised our Cap and we are comfortable below 2.5.
Yes.
Understood, sir. Sir, my next question is a little structural in nature. I just wanted to understand when we look at your JV expansion plans, JSW, you know, expansion plans for the next decade also, we see that, largely blast furnace will govern the expansion phase, right? All the scrap-based EAF, on a smaller term you are putting in. How far is India actually investing in scrap-based EAF, you know, assets? How will blast furnace keep on dictating the expansion in the near decade as well?
Even in our today's mix, if I were to see, I think about more than maybe close to one-third or 30% plus is electric arc furnace based. Going forward, we have mentioned that we would be putting up a facility in Salem of 4 million tons for Green Steel, which will be against DRI and scrap based. We are also, now, you know, adding scrap processing facilities and in the country. We are beginning with west, then we will add one more in south, which have already You know, we have already started creating a supply chain for scrap buying and that's improving every year. We are increasing scrap collection and putting it back into our furnaces.
That will further, even in the converters if you do that, it'll further bring down your overall emissions. Having said that, you know, we must be conscious of the fact that India doesn't have too much of scrap generation as we speak. It will take time for India to generate scrap on its own. Scrap availability from Europe or from U.S. may go down with their own focus on scrap-based production. The cost of steel or the cost of the technologies are also higher. For now, the best technology for India is blast furnace based and using various technologies to reduce the emissions from the blast furnace based steel making.
Fuel consumption circulating gases back, using, recovery, gases and putting it back into the blast furnaces to reduce your met coal.
Dehumidifier.
Dehumidifier. Various technologies are being used to reduce the emissions from the blast furnaces. That combination with the grade of iron ore we have makes better sense.
Thank you.
Thank you.
Next question is from the line of Rahul Gupta from Morgan Stanley. Please go ahead.
Hi. Thank you for taking my question. Industry demand grew by 8% in FY 2026 while you grew by 12%. If I adjust numbers for BPSL and BMM, you are guiding for again 12% growth for FY 2027. Does that mean that you remain confident that the industry would grow at around 8%? That is number one. One related question I have is your capacity expansion guidance is at around 12% CAGR through the years. Does that mean that you would continue to grow at around 1.5 times of the industry continuously for the next few years? Thank you so much.
Yeah. I think, you know, we all of us agree that, you know, India will be growing close to about 7% of GDP. The elasticity for steel growth is close to 1.3 times to the GDP. We have seen this in the past several years. Our guidance is about 8%-9% or 7%-9% would be the growth in the steel market in the coming year. The way India is growing, the way India is likely to be, we have no doubt that it will be growing close to about 8%-9% of the steel side. Now, this is the overall steel, out of which flat steel is part of it, and we are largely getting to the flat steel.
We have no doubt that about 10%-12% of market sales growth for JSW would be a challenge on those lines. We are quite confident on that.
Our growth for sales for this year, we have guided is about 10%.
Jayant sir, if I adjust BPSL from the base and BMM from FY 2027, that implies around 12% growth, right?
No. The way we have given our guidance, it's excluding BPSL and including BMM volume.
Right. Exactly.
If you take that-
If I adjust BPSL from fiscal 2026 base as well, your growth would be more like 12%, right?
That's right.
We've adjusted growth from BPSL if you net off. According to me, it's about 10%. You can ask our investor. Sales is 10% and production is 13%.
Yeah.
They can clarify that to you if there is any doubt.
We can reconcile that offline, no problem.
Thank you. Ladies and gentlemen, we will take that as the last question for today. I now hand the conference over to management for closing comments. Over to you.
Thank you, operator. Just one clarification I would like to make. This is Ashwin Bajaj. We've got some queries, you know. Regarding the accounting impact of BPSL, we have a slide, page number five in the presentation. Kindly refer to that. BPSL has been deconsolidated at March end, and the numbers for BPSL will not be part of financials or EBITDA. It would be equity accounting. There is a line in the P&L which says income from associates and joint ventures. That's where BPSL financials would sit. Over to Mr. Acharya for any closing comments.
I think as we highlighted, we had a transformational year. Our operational performance has been strong. Our balance sheet is much stronger, and we have deleveraged, making the foundation for the next phase of growth. We have targeted 62 million tonnes in India by FY 2032, in addition to the joint ventures which would cumulatively add 16 million tonnes. We believe that India centric growth, India is in a very long time growth story for a decade or two, and we would be able to support that growth in the industrial ecosystem in India. Thank you very much. If you have any other questions, please reach back to the investor site. Thank you.
Thank you, members of the management team. On behalf of JSW Steel Limited, that concludes this conference. Thank you for joining us. You may now disconnect your line.