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Revenue in line; low costs drive EBITDA beat

* Revenue stood at INR123b (-10% YoY and -7% QoQ), in line with our estimates. The decline in growth was primarily led by muted volume, which was partially offset by a better ASP.

* Adj. EBITDA stood at INR30.1b, rising 6% YoY and 21% QoQ (against our est. of INR25.5b), supported by lower costs and better ASP.

* EBITDA/t stood at INR15,819 (+3% YoY and +7% QoQ) vs. our est. of INR13,056/t in 1QFY26.

* APAT for the quarter stood at INR14.9b (+12% YoY and +36% QoQ), against our est. of INR10.8b.

* Production and sales for 1QFY26 stood at 2.09MT (flat YoY and -1% QoQ) and 1.9MT (-9% YoY and -11% QoQ), respectively, due to the early onset of the monsoon and inventory build-up.

* The share of exports increased to 7% in 1QFY26, compared to 3% in 4QFY25.

* ASP for the quarter stood at INR64,708/t (flat YoY and 5% QoQ), led by a higher share of flat products.

* Net debt stood at INR144b as of Jun’25 vs. INR120b in 4QFY25. Net debt/EBITDA increased to 1.49x in 1QFY26, compared to 1.26x as of 4QFY25.

Highlights from the management commentary

* Management reiterated its FY26 crude steel production guidance of 9-10mt, with incremental volumes of 0.2-0.3mt expected from existing facilities and 0.7-1.6mt from new expansions.

* The reduction in raw material costs was driven by savings in coking coal, PCI, scrap, and other inputs.

* Coking coal costs declined USD11/t in 1QFY26 (in line with the guidance) and are expected to decline by another USD5/t in 2QFY26.

* Domestic steel prices are currently 5-7% lower than in 1QFY26, with a potential recovery expected in the latter part of 2QFY26.

* Debt has increased temporarily due to working capital build-up and is expected to ease from 2Q onwards

Valuation and view

* JSP reported a decent 1Q performance, supported by healthy NSR and muted costs. Earnings are expected to improve in 2H, aided by volume ramp-up, NSR recovery, and continued muted costs. With the completion of its ongoing Angul expansion, JSP’s crude steel capacity will rise 65% to 15.9mtpa and finished steel capacity will increase 90% to 13.8mtpa, providing significant headroom for earnings growth.

* While debt increased to 1.5x as of 1Q-end, JSP aims to keep debt levels in check as working capital eases. We maintain our FY26/27E earnings and expect the company to generate strong CFO over FY26-27, which will be directed towards ongoing expansions. At CMP, the stock trades at 6.5x EV/EBITDA on FY27E. We reiterate our BUY rating with a revised TP of INR1,180, based on 7.5x EV/EBITDA on FY27 estimate.

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