JTL Industries Ltd Q3 FY2025 Concall Summary

Key Takeaways

• Volume miss, but the delay is mechanical: Q3 volumes of 97,488 tonnes undershot because the DFT expansion slipped from Q3 to Q4, deferring associated sales; nine-month volumes still hit a record 297,000 tonnes.
• Exports doubled and mix improved: Export volumes reached 10% of sales (vs 5% prior) and value-added products contributed 21% of the Q3 mix, both lifting the revenue quality even as steel prices fell ~10% YoY.
• Margins are at a cyclical trough: EBITDA per tonne sank to a "subdued" ₹3,800–₹4,000 as HR coil prices corrected from ~₹52–₹53 to a bottom of ~₹46, triggering channel de-stocking that no discount could offset.
• The DFT catalyst is now imminent: Cold trials are awaited, and management targets a ₹200–₹250 per tonne EBITDA uplift from DFT alone, with a further ₹250–₹300 from the broader value-added mix shift.
• What to watch next quarter: Whether Q4 volumes hit the guided 125,000–135,000 tonnes, whether safeguard duty actually lifts steel prices and demand, and whether Nabha Steel's accounts are consolidated by year-end as promised.

Volume & Demand: The De-Stocking Drag

• Q3 shortfall was a timing issue, not a demand collapse: The DFT line planned for Q3 commissioning moved to Q4, so the associated sales volume never materialized. Management frames the miss as a push into Q4 rather than lost business.
• Price-led de-stocking froze the market: HR coil prices slid from ~₹52–₹53 to a floor of ~₹46 during the year, and when prices are falling, the channel stops buying regardless of discounts. Management notes that even with material available in good quantities, "no amount of discount would push material because demand itself was subdued."
• Safeguard duty is the swing factor: Newer HRC imports have already stopped on duty rumors, and management expects a government decision in the budget or soon after. If implemented, cheap imported material exits the Indian market, steel prices should rise, and the "looming problem of price decline from imported/dumped material" is gone. The risk: short supply could itself constrain demand next quarter.
• Q4 demand outlook is optimistic but conditional: Management is "optimistic that from February prices will be a little upward or at least stable," and stability plus year-end project completions should unlock demand. The first month of Q4 has already shown this pattern.

Dhruv Singla: "we are optimistic that from this coming month of February, the prices are going to be a little bit on the upward side. If not declining, they will be stable."

Margin Recovery Path

• Current margins are explicitly called a trough: Management describes ₹3,800–₹4,000 EBITDA per tonne as "a subdued level of the year of price correction." The target is to return to normalcy of ₹4,500 this quarter, then add 10%–15% from DFT next year, reaching ~₹5,000.
• DFT is the structural margin lever: Direct Forming Technology produces square and rectangular sections directly from HR coils, streamlining production and reducing waste. Management targets a ₹200–₹250 per tonne uplift from DFT alone, and with the broader value-added push, a ₹250–₹300 total uptick from current levels.
• Value-added mix is the second lever: Value-added products were 21% of Q3 sales; the target is 40%–45% next financial year and 55%–60% at 0.2 crore tonnes capacity. Higher mix mechanically lifts blended realizations and margins.
• ROCE dipped on pre-revenue assets: ROCEs slipped because assets are sitting at the plant and advances increased. Management expects normalization "this quarter" as new capacity begins sweating.

Pranav Singla: "first we want to get to our normalcy levels which we should be coming on this quarter itself. And from that situation, we can see a jump up of an additional 10% to 15% EBITDA per tonne as the DFT is fully value-added item."

Capacity Expansion: The 0.1 Crore Tonne Milestone

• FY25 exit capacity: JTL will reach 0.1 crore tonnes (0.1 crore tonnes) of installed capacity by end of this financial year, with the Mangaon DFT line adding 2 lakh tonnes and the Raipur expansion already doubling capacity to 2 lakh tonnes.
• Next leg already mapped: An additional 0.1 crore tonnes will be installed at a single Maharashtra location over the next two years, in ~50,000-tonne half-yearly increments starting H1 next year, completing by FY27 end.
• Mix shifts toward primary and value-added: At 0.1 crore tonnes, the primary/secondary mix will be ~70/30 (no secondary expansion planned). At 0.2 crore tonnes, value-added products are targeted at 55%–60% of sales.
• DFT creates a competitive moat: The Mangaon DFT line, located next to a port, will produce structural steel sections up to 350x350 mm. Management claims JTL will be "the only one in that area producing it" and only the third player in India after APL Apollo and JSTL to implement that size, limiting competition in export and domestic structural markets.

Dhruv Singla: "We would be the only one in that area producing it. So, we are next to the port. There is a very good demand from the export market for these products of structural steel... a section of 350-350, we would essentially be the third one in India after APL Apollo and JSTL to implement this size. So, not a lot of competition in this area here."

Nabha Steel: Consolidation & Ambiguity

• Nabha contributed 33,277 tonnes year-to-date: The 67%-held partnership firm is a material volume contributor, and its volumes are reflected in JTL's total reported volumes.
• Profit recognition is partial and confusing: Management stated that Nabha's revenue does not appear in JTL's income statement, only its share of profit appears in other income. When pressed on where exactly Nabha's volumes show up, answers were contradictory: volumes are "reflecting the entire volumes, but the share of profit is reflecting in the other income." An analyst flagged the inconsistency.
• Conversion to subsidiary is imminent: Nabha is being converted from a partnership firm into a subsidiary, with consolidated accounts targeted by the end of this financial year. Management says "it will happen in this quarter itself." Once consolidated, Nabha's full financials will be portrayed in JTL's results, removing the current opacity.

Balance Sheet & Funding

• Zero debt, and intends to stay that way: JTL has been debt-free for decades and plans no long-term debt. Working capital needs will be met by bankers who are "ready to provide," but the core funding philosophy is internal accruals plus equity.
• ₹1,000 crores CAPEX is fully funded: The QIP (₹300 cr) and preferential issue (₹675 cr) cover the planned expansion. Post that, CAPEX will be internally accrued from profits.
• Cash position is lower than the raise suggests, but explained: Only ~₹121 cr cash is on hand against ~₹975 cr raised because preferential warrant payments are staggered: the majority will be received by March/April, with the final deadline in September. Money already deployed toward CAPEX and working capital.
• Promoter shareholding rising: After the preferential issuance, promoter shareholding will touch close to 57%.

Dhruv Singla: "In the last decades, we have been debt-free. We intend to be debt-free for the next coming years as well. So, we are not taking any long-term debts, and we have a good cash position."

Guidance & Commitments

Key Metrics