# 1. Financial Performance ## A. Key Figures * **Gross Revenue:** **₹15,172 Cr** consolidated (+12% QoQ) * **Adjusted EBITDA:** **₹1,593 Cr** (5% margin) · **₹6,981/ton** * **Underlying EBITDA:** **₹8,516/ton** (+₹1,535/ton QoQ) * **PAT:** **₹189 Cr** consolidated * **Net Debt:** **₹15,443 Cr** (+₹1,287 Cr QoQ) * Leverage: 1.72x Net Debt/EBITDA ## B. Revenue Growth * **Record Volume Execution:** Sales volumes surged **22% QoQ to 23 crore tons**, driven by higher production despite a difficult pricing environment. * **Revenue Mix Shift:** Lower by-product sales due to **increased captive consumption** reduced top-line realizations by ~₹3,000 Cr, though this supports internal production scaling. * **Pricing Headwinds:** Revenue growth was partially offset by **declining steel prices**, with a short-term realization gap of ₹1,000 per ton between quarters. ## C. EBITDA & Margins * **One-Off Cost Impact:** Q3 EBITDA per ton depressed by **₹350 Cr in start-up costs** related to BF2 commissioning, primarily from high-cost bought-out coke. * **Core Profitability Resilient:** Underlying EBITDA of **₹8,500/ton** reflects stable operational performance, with one-time costs expected to **not recur** post-ramp-up. * **Inflection Point Reached:** New capacities now online; company positioned for **meaningful EBITDA and cash flow expansion** as ramp-up completes. ## D. Net Profit * **PAT Reflects Non-Recurring Charge:** Profit after tax of ₹189 Cr includes full impact of **one-time start-up expense**, masking stronger underlying earnings power. ## E. Balance Sheet * **Leverage Elevated but Explained:** Net debt rose sequentially due to **CAPEX funding and lower EBITDA**, pushing leverage to 72x — a peak-level driven by project cycle timing. * **Inventory Discipline Maintained:** No material buildup observed; levels have normalized post-quarter-end. --- # 2. Production & Capacity ## A. Key Figures * Production: 2.51 million tons Q3FY26 (+25% QoQ) * Capacity Expansion: 3 million tpa BOF3 at Angul on track for Q4FY26 · CCL1 (0.2 million tpa) commissioned Jan-26 * **Power Revival:** **1,050 MW SBPP** fully synchronized with grid by Jan-26 * **Cost Savings (Est.):** **₹750–850/ton** expected from slurry pipeline upon commissioning ## B. Blast Furnace Ramp-up * **Strong Ramp-up Performance:** Production surged on the back of **BF2 and BOF2 commissioning**, with rapid stabilization achieved within industry-standard timelines despite operational challenges. * **Coke Cost Normalization Underway:** Initial higher costs from bought-out coke are easing post-commissioning of new coke oven battery in Nov-25, supporting margin recovery. * **High Utilization Achieved:** Bhagavati Subhadrika BF-II reached **48% capacity utilization** (exit run rate 58%), reflecting effective execution during ramp-up. * **Infrastructure on Track:** Slurry pipeline at **94% completion**, set for full commissioning by FY26-end, enabling significant logistics cost reduction. ## C. BOF & Downstream Commissioning * **Downstream Expansion Accelerating:** CCL1 now live; **CCL2, CGL2, and one Q&T furnace** in final commissioning stages, enhancing value-added product capability. * **BOF3 and DRI Roadmap Clear:** BOF3 to be completed next quarter; **DRI1 by end-FY27**, critical for metallics integration and future capacity utilization. * **Phased BOF Utilization Expected:** BOF operations to run at **60%-66% capacity in FY27** even without full DRI integration, signaling strong demand visibility. ## D. Power Plant Revival * **Full Power Revival Achieved:** Successful synchronization of both 525 MW modules marks completion of 1,050 MW SBPP revival under IBC, ensuring energy security for steel operations. * **Stabilization Phase Ongoing:** Post-commissioning stabilization expected over **2–3 months**, with both units now feeding into internal grid. --- # 3. Volume & Product Mix ## A. Key Figures * Sales Volume Guidance: 8.5–9 million tons (on track, excludes metallics) * **Value-Added Product Share:** **66%** (down from 71%, expected to recover) * **Flat to Long Ratio (Q3):** **50-50** → projected **55% flat / 45% long in Q4** * Total Capacity: 15 million tons, with 3% allocated to auto ## B. Sales Volume Trends * **Volume Execution on Track:** Company is on pace to meet full-year sales volume guidance with two months remaining, driven by scaled production and sectoral approvals. * **Lower Realization Drivers:** Reduced per-ton realization reflects strategic shift toward **higher-volume HRC and thicker sections**, prioritizing productivity over ASP during ramp-up. * **By-Product Impact:** Blended realization will remain below benchmarks as **by-product credits are fully internalized**, with no negative EBITDA impact. ## C. Flat vs Long Products * **Strategic Mix Balancing:** Despite near-term shift to long products due to demand swings, management emphasizes a **balanced 50-50 target**, with **Q4 flat product rebound expected** on auto and appliance demand. * **Productivity Over ASP:** Lower HRC output earlier favored value-added trades; now, **higher HRC volumes enable thick-section production**, boosting throughput and EBITDA despite ASP pressure. * **Core Long Product Focus Maintained:** Rail, MLSM, and structural products remain central, with active output expansion despite rising flat share. ## D. Value-Added Product Share * **Mix Transition Underway:** Current dip in value-added share reflects ramp-up priorities, but **gradual return to 70%+ targeted** as utilization stabilizes and heat treatment capacity enhances flat product realizations. * **OEM Approvals Secured:** Full approvals in auto and durables provide foundation for **higher-value flat product growth** and improved mix in coming quarters. --- # 4. Input Costs & Inflation ## A. Key Figures * **Coking Coal Cost Increase:** **$2/ton** QoQ (+ below guided $3–$5) * **Q4FY26 Coal Cost Guidance:** **$18–$20/ton** sequential increase * **Captive Coal/Iron Ore:** **15%-20%** of coking coal from Mozambique & South Africa; captive mines commissioned ## B. Coking Coal Trends * **Below-Guided Inflation:** Coking coal cost rise of $2/ton in the quarter came in below prior guidance, with no broad input cost escalation expected in FY26 outside of coal. * **Q4 Cost Pressure:** Sequential increase in coking coal consumption cost expected to be **$18–$20 per ton**, representing the primary near-term cost headwind. * **Cost Mitigation Dynamics:** Despite higher coal prices, sequential cost reduction observed due to **volume absorption** and **lower value-add impact**, partially offsetting inflation. ## C. Iron Ore & Captive Supply * **Captive Advantage:** Commissioned coal and iron ore mines provide partial insulation from global volatility, with **higher-quality in-house coke improving production efficiency**. * **Offsetting Gains:** Rising coke output and improved internal quality are expected to yield **cost portfolio improvements**, countering some coal price pressures. ## D. Cost Savings Initiatives * **Enterprise AI Transformation:** AI and digitalization now scaled across sales, logistics, and decision support, driving **real-time visibility** and **margin expansion**. * **Structural Cost Offsets:** Slurry pipeline and captive assets expected to fully neutralize **mix-related margin pressures**, with additional upside from **captive power plant** and **Utkal mine opening**. --- # 5. Demand & Pricing ## A. Key Figures * **Domestic Steel Price Recovery:** **₹3,000–₹3,500/ton** higher vs. December 2025 * **Blended NSR Decline:** **~₹3,000/ton** sequential drop driven by product mix shift * India Crude Steel Production: 42.5 million tons in Q3FY26 (+2% QoQ) * India Steel Exports: 2.5 million tons (+30% QoQ), Net Exports: 0.8 million tons * **Export Share of Sales:** **6%**, with outlook of **5%-10%** range ## B. Domestic Price Recovery * **Pricing Rebound Underway:** Domestic steel prices have rebounded sharply from Q3 lows, supported by strong demand and improved market dynamics, with realizations now significantly above prior quarter levels. * **Mix-Driven Pressure Easing:** Q3 realization decline was largely due to temporary shift toward low-margin HRC and captive consumption of by-products; recent mix improvements are contributing to recovery. * **Margin Resilience:** Despite price corrections in HRC and longs, domestic margins remained above export levels, allowing market share gains without aggressive discounting. * **Realization Catch-Up Expected:** After lagging industry trends in Q3 due to product mix, company expects Q4 realizations to align with and potentially exceed industry averages. ## C. Export vs Domestic Mix * **Domestic Focus Intact:** Strategic preference for higher-margin domestic sales has reduced export reliance, even as peers increase shipments ahead of EU CBAM; exports to remain a minor portion of overall volume. * **India Returns to Net Exporter:** Surge in national exports and falling imports made India a net steel exporter in Q3 for the first time in six quarters, amid weak domestic demand growth. * **Selective EU Exposure:** While CBAM lifts European prices, company will pursue export opportunities only selectively, maintaining discipline on profitability and volume mix. --- # 6. Risks & Commodity Exposure ## A. Key Figures * **Coking Coal Spot Price:** **$250** (current level) * Safeguard Duty Rates: 12% (Year 1) · 11.5% (Year 2) · 11% (Year 3) * **Adjusted Margin:** **₹15,000** (Q1) → **₹8,500** (latest) ## B. Coking Coal Inflation * **Transitory Cost Pressure:** Management views recent coking coal price surge to $250 as **seasonal and short-lived**, with limited midterm impact due to long-term supply contracts. * **Structural Mitigation:** Long-term coking coal arrangements insulate the company from near-term volatility, supporting cost predictability. ## C. New Capacity Competition * **Global Supply Overhang:** Record Chinese steel exports of **90 million tons** in 2025 are pressuring global markets, including India, amid weak domestic demand in China. * **Trade Protection in Place:** A three-year safeguard duty—peaking at **12% in Year 1**—has been imposed to shield domestic producers from import surges. * **Margin Sustainability Concerns:** Analysts highlight risk of volume-driven earnings going forward, with **sharp margin compression already observed** and new HRC capacity additions from Tata Steel and AMNS posing competitive threats. --- # 7. Guidance & Outlook ## A. Key Figures * **CAPEX:** **₹2,076 Cr** in quarter · **₹32,925 Cr** cumulative (vs. **₹47,043 Cr** total announced) * Net Debt/EBITDA: 1.72x (Q3FY26) with path to sub-1.5x by year-end ## B. Q4 Volume & Profit View * **Inflection Point Confirmed:** Performance poised for meaningful improvement in Q4, driven by higher opening volumes, improved steel realizations, and stabilizing input costs. * **Outlook Confidence:** Management expects one of the strongest quarters ahead, with profitability and volumes set to outperform Q3 on better demand and pricing momentum. * **Value-Add Trajectory:** Realizations and value-added product mix expected to recover and expand medium to long term as new capacities ramp. ## C. CAPEX & Leverage Target * **CAPEX Discipline Maintained:** No changes to full-year or multi-year CAPEX guidance; recent increases reflect scope expansion, not cost overruns. * **Leverage Reduction Pathway:** Despite near-term 72x net debt/EBITDA, company remains on track to achieve sub-5x target by FY26 end, supported by ramp-up cash flows and asset utilization. * **Balance Sheet Resilience:** High leverage deemed manageable versus peers; long-term 5x through-cycle target remains intact with healthy debt-to-equity. ## D. FY27 Business Plan Timing * **Transformational Phase Underway:** Current year marks strategic inflection in building world-class assets for India’s infrastructure growth. * **FY27 Guidance Imminent:** Business plans being finalized, with updated outlook expected **by end of next quarter**. * **Strategic Priorities:** Focus remains on safe operations, margin expansion, cash flow generation, and value-accretive, sustainable growth.