JSW Steel margin plunges 10.13 points sequentially
Revenue fell 7.46% from Q4FY26 while expenses rose 4.94%, reversing the prior quarter's margin surge.
Filed 17 Jul 2026, 14:43 IST · JSW Steel Ltd (JSWSTEEL)
Key takeaways
- Consolidated operating margin fell 10.13 percentage points sequentially as revenue declined 7.46% while expenses rose 4.94%.
- Net profit rose 112.58% year on year as operating profit grew 25.14%, interest fell 22.78% and the tax rate eased 3.82 percentage points.
- The stock gained 1.33% on the results day, close to its 1.4% median move after the last eight results, when it rose three times and fell five times.
Price around the results
Q4FY26 peak unwinds in Q1FY27
JSW Steel's consolidated revenue declined 7.46% sequentially, while operating profit fell 45.8%, causing operating margin to drop from 24.43% to 14.3%. The sequential deterioration came despite interest expense falling 21.03%, as the lower operating profit fed through to a 72.24% decline in pre-tax profit. Year on year, the picture was better: revenue grew 9.77% and operating profit increased 25.14%.
Higher costs and tax rate weighed on the quarter
Expenses rose 4.94% sequentially even as revenue fell, which explains the 10.13-percentage-point margin contraction. The tax rate increased 9.49 percentage points from Q4FY26, further reducing the conversion of operating profit into net profit. Other income was 11.57% of pre-tax profit, so reported earnings also included a meaningful non-operating contribution; year on year, other income more than doubled while the tax rate fell 3.82 percentage points.
Year-on-year improvement sits below the Q4 margin peak
Operating margin improved 1.75 percentage points year on year and stood 0.74 percentage points above the 13.56% median for 12 Commodities peers that had reported the quarter. The five-quarter sequence moved from 8.68% in Q2FY26 to 13.35% in Q3FY26, 24.43% in Q4FY26 and 14.3% in Q1FY27, making the latest result a sharp reversal of the Q4 expansion rather than a continuation of it.
Management outlines a large capacity and capex pipeline
Management said FY27 capex is expected at Rs 22,000-24,000 crore. The company said JVML's Phase-2 project will add 5mtpa at a cost of Rs 26,000 crore and is scheduled for commissioning by FY30, while the presentation said Dolvi Phase-III is intended to raise capacity from 10mtpa to 15mtpa by September 2027. Management also flagged a below-normal monsoon as a risk to rural demand and said subdued Chinese fixed-asset investment, retail sales and property activity remain concerns.
Initial market response was within the stock's usual range
The shares rose 1.33% on the results day and were up 2.95% at the next session's close. Across the last eight result reactions, the stock moved up three times and down five times, with a median absolute move of 1.4%, putting the initial move close to its typical size despite the positive direction.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹47,364 cr | ₹51,180 cr | -7.46% | +9.77% |
| Other income | ₹724 cr | ₹341 cr | +112.32% | +106.86% |
| Expenses | ₹40,589 cr | ₹38,679 cr | +4.94% | +7.57% |
| Operating profit | ₹6,775 cr | ₹12,501 cr | -45.80% | +25.14% |
| Operating margin (%) | 14.30% | 24.43% | — | — |
| Interest | ₹1,712 cr | ₹2,168 cr | -21.03% | -22.78% |
| Depreciation | ₹2,137 cr | ₹2,148 cr | -0.51% | -15.77% |
| Profit before tax | ₹6,258 cr | ₹22,547 cr | -72.24% | +97.29% |
| Tax | ₹1,464 cr | ₹3,134 cr | -53.29% | +69.64% |
| Net profit | ₹4,696 cr | ₹19,243 cr | -75.60% | +112.58% |
| EPS (₹) | ₹19.05 | ₹67.07 | -71.60% | +112.85% |
Operating margin of 14.30% compares with a Commodities sector median of 13.56% across 12 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +1.33% | +0.25% |
| Next session | +2.95% | — |
| 5 sessions | +1.64% | +2.91% |
Volume on the results session was 1.97× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- FY27 capex is expected to be ₹22,000–24,000 crore.
Expansion
- Approved projects include JVML’s Phase-2 5mtpa capacity expansion, costing ₹26,000 crore.
- The JVML Vijayanagar Phase-II 5mtpa expansion is scheduled for commissioning by FY30.
- The Utkal greenfield project includes facilities scheduled for commissioning between FY28 and FY30.
- Dolvi Phase-III will expand capacity from 10mtpa to 15mtpa and is scheduled for commissioning by September 2027.
- A 1mtpa EAF and structural mill at Kadapa is scheduled for commissioning by FY29.
New products
- The Vijayanagar continuous galvanising line will produce high-strength automotive grade steel.
New initiatives
- Meri Suraksha - Meri Zimmedari was launched to strengthen safety ownership among contract workers.
- The E-Permit to Work system was rolled out across all plants, with implementation at 69%.
Problems & risks
- The company identifies a below-normal monsoon as a key risk to rural demand.
- China’s FAI and retail sales remain subdued alongside a weak property sector.
- Geopolitical uncertainties remain a concern for the global growth outlook.
What to watch
- Operating margin versus the Q1FY27 level of 14.3%.
- FY27 capex execution against management's Rs 22,000-24,000 crore expectation.
- Progress on Dolvi Phase-III, which management said is scheduled for commissioning by September 2027.