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JINDALST reported strong Q4 performance. Adjusted EBITDA at Rs26.5bn beat estimates, driven by higher FX gains and NSR improvement, partly offset by start-up costs and higher coking coal costs. EBITDA/t improved to Rs10,103. Volumes remained robust (2.7mt production, 2.6mt sales), while a one-off Rs8.3bn impairment on its Australian assets weighed on PAT. Structurally, the company is transitioning its product mix from 51:49 (longs:flats) in FY26 to 30:70 by FY28, increasing value-added volumes and supporting realizations, alongside cost savings of Rs750-1,000/t from the slurry pipeline. That said, we expect EBITDA/t to reach Rs14,500 by FY28E. We retain BUY and TP of Rs1,400.

Strong EBITDA beat driven by FX gains

JINDALST reported adjusted EBITDA of Rs26.5bn (+66.2% QoQ, +6.7% YoY) in Q4, exceeding consensus/Emkay estimate by 7.2%/3.2%, respectively. The outperformance was primarily driven by higher FX gains of Rs2.9bn in Q4 (vs Rs0.4bn in Q3), along with an Rs4,700/t improvement in NSR supported by favourable pricing. This was partly offset by Rs1.2bn of start-up costs and a ~USD20/t increase in coking coal costs. Consequently, EBITDA/t improved to Rs10,103 (vs Rs6,986 in Q3). Operationally, production increased to 2.7mt (+5.6% QoQ), while sales rose to 2.6mt (+14.9% QoQ). During the quarter, the company booked a one-off impairment of Rs8.3bn on its Australian mining assets, impacting PAT at Rs10.4bn. For FY26, net debt increased to Rs160bn (+34% YoY), with net debt/EBITDA rising to 1.7x (vs 1.3x in FY25).

Structural margin expansion underway

As of FY26, product mix stood at 51:49 (longs:flats), which we expect to shift meaningfully to 30:70 by FY28, led by the recent expansion. We believe this transition is likely to increase the share of value-added products to 8.5mt in FY28E from 5.8mt in FY26, supporting higher realization premiums over FY27-28E. In addition, Angul, being an integrated facility with improving backward integration, is well-positioned to benefit from operating leverage as volumes ramp up. This is further aided by expected cost savings of Rs750-1,000/t from the slurry pipeline, scheduled for commissioning in Q1FY27. Overall, we expect the shift toward a richer product mix, coupled with structural cost efficiencies, to drive margin expansion and improve earnings quality going forward.

Volume growth to drive profitability surge; maintain BUY

Over FY26-28E, we expect 19% volume CAGR (vs peers’ at ~3%), with the new capacity likely to operate at ~50%/80% utilization in FY27/FY28E, driving volumes to 10.8/12.8mt, respectively. This should translate to a strong EBITDA CAGR of 43% over FY26-28E. Factoring in Q4 results and the management’s guidance on volumes and operational efficiencies, we believe pricing strength, along with improvement in operational efficiencies, will drive EBITDA/t to ~Rs14,500 by FY28E. We retain BUY and TP of Rs1,400.

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