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Weak Q1; EBITDA Miss Led by Lower VAP share

Est. vs. Actual for Q1FY26: Revenue – MISS; EBITDA/t – MISS; PAT – MISS

Recommendation Rationale

• Weak Q1FY26 performance: JTL’s EBITDA de-grew by 41% YoY (up 31% QoQ), missing our estimate with the EBITDA/t at Rs 2,322/t (down 50% YoY but up 7% QoQ on a weak base of Q4FY25), a 40% miss vs. estimate, led by lower sales realisation, higher other expenses and inventory losses booked in Q1FY26.

• Higher CG sales lead to lower ASP: On account of higher CG (commercial grade) sales in the mix, average sales prices realisation (ASP) declined by 17%/12% YoY/QoQ. Furthermore, the benefit from the higher HRC prices in Apr-May’25 due to safeguard duty imposition was offset by lower HRC prices in Jun’25. Due to the HRC price fluctuation, it took an EBITDA/t hit of Rs 1,000/t reflected in inventory loss in Q1FY26.

• EBITDA/t trajectory growth will be more gradual now: EBITDA/t is likely to improve only gradually now as newer products (DFT, GI Coils, colour coated) will be introduced at a discount to the market to gain market share (earlier target of EBITDA/t at Rs 4,200-4,400/t range in FY26). The target is to get EBITDA/t of over Rs 5,000/t by FY28.

Sector Outlook: Neutral Company

Outlook & Guidance: The company’s capacity will grow to 2.25 MT through the Mangaon plant (1.3 MT expansion) by the end of FY27. FY26 sales volume guidance stands unchanged at ~5 Lc tonnes with ~1.2 Lc tonnes in Q2FY26 and balance skewed towards H2FY26. In FY27, it will taget 30% sales volume growth YoY. Capex guidance for FY26 is unchanged and will be in the range of Rs 240-250 Cr.

Current Valuation: 20x P/E on Mar’27E EPS (Unchanged)

Current TP: Rs 78/share (Unchanged)

Recommendation: We maintain our HOLD rating on the stock.

Financial Performance: JTL posted a weak set of numbers with EBITDA coming below our estimates. Revenue stood at Rs 543 Cr, up 6%/16% QoQ/YoY, missing our estimates by 5%, led by lower ASP due to a drop in the VAP share. EBITDA stood at Rs 23 Cr, down 41% but up 31% and missed our estimate, led by top-line miss. The YoY drop in EBITDA is led by higher other expenses. EBITDA/t stood at Rs 2,322/t, almost up 7% QoQ but down 50% YoY, led by lower VAP share. PAT stood at Rs 17 Cr, down 46% YoY and almost flat QoQ, led by higher D&A expense

Outlook: With the phase-wise volume expansion in progress, we model Revenue/EBITDA/PAT CAGR of 25%/36%/26% over FY25-28E. After the weak Q1FY26 results, we cut our FY26/27 EBITDA estimates as we factor in lower sales price realisation. Execution of the growth projects and market acceptance of the key DFT, colour-coated, GI Coil, and ARW pipes, which the company will introduce over the upcoming quarters, will be the key monitorables

Valuation & Recommendation: We maintain our HOLD rating and value JTL at 20x (unchanged) on our Mar’27 EPS to arrive at our Mar’26 target price of Rs 78/share, implying an upside potential of 2% from the CMP.

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