JSW Steel stock likely to face near-term margin pressures

Volumes and operating profit for JSW Steel grew year-on-year (Y-0-Y) in the July-September quarter (Q2) of 2025-26 (FY26), but profitability may face near-term pressures.

- DEVANGSHU DATTA

Revenues rose 5 per cent quarter-on-quarter (Q-o-Q), driven by 10 per cent volume growth as capacities ramped up at Dolvi, Maharashtra; JSW Vijayanagar Metallics (JVML); and JSW Bhushan Power & Steel (BPSL). Net sales realisation, however, fell 4 per cent Q-o-Q due to lower steel prices.

Operating profit declined 6 per cent Q-o-Q to ₹7,100 crore, though it grew 31 percent Yo-Y. Operating profit per tonne dropped 14 per cent Q-o-Q to ₹9,693 per tonne (up 9 percent Yo-Y), reflecting lower realisation, partially offset by savings in coking coal and power costs and higher volumes.

Blast Furnace No. 3 (BF3) at Vijayanagar is shut until February 2026. Exports are also expected to slow due to the carbon border adjustment mechanism in Europe, lower steel prices, and higher coking coal costs. These factors are likely to weigh on short-term profitability.