Jindal Steel & Power reported revenue of INR 167 billion for the fiscal second quarter of 2027, marking a 43% increase compared to the previous year. While sales volume grew, higher coking coal costs pressured profit margins. Investors are now monitoring whether the company can maintain its profitability per tonne as raw material prices fluctuate in the global market.
Jindal Steel & Power (JSPL) delivered a strong revenue performance in the second quarter of the 2027 fiscal year, reporting total revenue of INR 167 billion. This reflects a significant 43% year-on-year growth and an 8% increase over the previous quarter, exceeding market expectations of INR 156 billion. The revenue growth was primarily driven by higher sales volumes, which helped the company manage market challenges effectively.
Impact of Raw Material Costs on Profits
While the top-line revenue grew, profitability per tonne faced pressure due to rising input costs. The company reported an Adjusted EBITDA of INR 25.7 billion for the quarter. A key metric investors track in the steel industry is EBITDA per tonne, which indicates how much profit the company makes for every unit of steel sold before accounting for interest and taxes. JSPL reported an EBITDA per tonne of INR 10,800, which came in ahead of projections of INR 9,800. However, the company faced a sequential decline in margins largely due to an increase in coking coal prices by approximately USD 12 to 14 per tonne. This highlights the vulnerability of steel manufacturers to global commodity price swings, which can quickly erode profit margins if not offset by higher steel prices or better operational efficiency.
Market Outlook and Valuation
Market analysts, including those at Motilal Oswal, have noted the company's strong performance, highlighting that the business model is benefiting from solid volume growth. The brokerage firm recently maintained its positive view on the stock, citing a valuation of approximately 6.7 times EV/EBITDA based on fiscal year 2028 projections. While analysts set a price target of INR 1,270, investors should understand that these valuations are based on future assumptions about market conditions and the company's ability to manage costs. These targets reflect an expectation that the company can continue to optimize its operations despite volatile raw material expenses.
What Investors Should Track Next
The steel sector is cyclical, meaning it often goes through periods of high and low demand based on broader economic activity. For Jindal Steel, the primary factor for investors to watch in the coming quarters will be the movement of raw material prices, particularly coking coal. If coal prices remain high or rise further, the company will need to demonstrate its ability to pass on these costs to customers through higher selling prices for its steel products. Additionally, monitoring the company's execution of its capacity expansion plans and overall debt management will be essential for assessing its long-term financial health and ability to sustain growth in a competitive environment.