JSW Steel Earnings Call for Q4FY26 & Full Year

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[00:00:00]gold mine from 20 to 30%.

[00:00:02]On the iron ore side, we have operationalized one new mine in Goa, and we have won one additional mine in Goa in the last few days.

[00:00:11]Uh we had previously stated our target of achieving a 50% captive iron ore integration and 25% captive cooking coal by FY 31 at a 50 million steel capacity.

[00:00:24]With the MDR acquisition, we now expect to be 50% captive for both cooking coal and iron ore uh by uh FY 31.

[00:00:37]Uh we would uh also target going forward to enhance our uh uh captive to meet the 50% share uh at 60 million 62 million tons capacity as well.

[00:00:53]So, thus the last year has truly been transformational.

[00:00:57]Uh in uh slide eight of our presentation, you will see that over the next decade, India will be the key steel market globally.

[00:01:06]China's steel production and consumption as a share of global demand peaked out around 2020, and it's expected to see a gradual decline.

[00:01:14]Other markets will witness muted growth.

[00:01:18]India is going through a nation-building phase with steel being a key building block for growth.

[00:01:23]This creates a long runway for steel demand to outpace the real GDP growth in the country. India as the second steel producer and consumer will continue to increase its share of global steel consumption from about 9% currently to 16% in a decade.

[00:01:39]We believe production growth is likely to lag consumption growth.

[00:01:43]JSW's strength and capabilities, including human capital, digitalization and AI, gives us the confidence to grow steadily to meet this Indian opportunity.

[00:01:55]At the same time, we will stay prudent and focused on creating shareholder value as we have done historically in the past.

[00:02:04]On the macroeconomic front, the global economic growth outlook remains resilient with IMF forecasting global growth in 2026 at 3.1%.

[00:02:16]And the outlook for 2027 at 3.2%.

[00:02:20]This is despite the world economy facing elevated uncertainty driven by geopolitical events, particularly in the Middle East, which is causing supply disruptions, inflationary risks, increasing the pressure on interest rates.

[00:02:34]IMF, however, has flagged that prolonged continuation of this conflict could result in an impact on the GDP.

[00:02:42]Even as global uncertainties persist, India continues to grow uh to show strong growth momentum.

[00:02:50]Uh the forecast by RBI for FY27 uh is 6.9% reflects the strength of domestic fundamentals uh with Indian growth demand remaining robust.

[00:03:04]Uh India has shown resilience in sustaining growth and geopolitical shocks.

[00:03:10]Uh such shocks are increasingly becoming the new normal. Economic activity in India has picked up in the second half of the year supported by GST led reforms.

[00:03:20]Healthy rural indicators, strong credit growth, improving capacity utilization and traction across key sectors continue to support the outlook.

[00:03:31]At the same time, risks such as energy price volatility and monsoon-related uncertainties needs to be monitored.

[00:03:38]India's steel consumption also grew at a healthy rate of 7.9% in FY uh 26.

[00:03:45]Um due to uh a large flow of imports in the uh Uh past two years, we have been a net importer.

[00:03:52]Uh with the imposition of safeguard duty last year, steel imports have declined and exports have risen, making India a net exporter after 2 years.

[00:04:01]Looking ahead, domestic steel demand is expected to grow at a healthy rate of 7 to 9% in FY27.

[00:04:09]Incrementally adding 12 to 14 million tons of demand.

[00:04:14]In China, steel production was down 4.6% in Q1, outpacing the 4.2% decline in consumption. With production easing and export licensing norms coming into play, from January beginning, steel exports, including semis, fell by 8.1% YoY.

[00:04:32]Looking ahead, a better demand-supply balance is expected as China steel demand is projected to uh contract at a slower pace than what we have seen in the previous year.

[00:04:47]JSW Steel's growth continues to be firmly India-centric, reflecting our long-term conviction in India's growth trajectory.

[00:04:54]Steel is the building block for growth across manufacturing, infrastructure, engineering, energy, and mobility.

[00:05:01]A strong domestic ecosystem directly contributes to self-reliance, while also creating an opportunity to build further resilience and self-reliance in the country.

[00:05:14]Our growth strategy continues to focus on disciplined capital allocation, efficient execution, technology, and digitalization to create sustainable value for all stakeholders.

[00:05:25]On sustainability, we were included in the S&P Global Sustainability Yearbook, earned the top 1% emblem globally across industries, and were ranked number one in the global steel sector.

[00:05:38]We have commissioned 1 GW of renewable capacity with a total 2.5 GW approved by our board, along with 320 MW of uh battery storage.

[00:05:49]We also deployed India's first electric locomotive for captive logistics at Vijayanagar.

[00:05:55]On the update of our projects, just to give you a brief overview at Vijayanagar, the BF3 expansion from 3 to 4.5 million is currently under testing and commissioning. The ramp up is expected to add incremental volumes from Q2 onwards.

[00:06:10]At Dolvi, the phase three expansion from 10 to 15 million ton is moving ahead as planned with civil work equipment erection underway and targeted for completion by September 27.

[00:06:21]At JSW Utkal in Odisha, the two pellet plants will be commissioned by FY28.

[00:06:27]The first phase of 5 million steel capacity will be commissioned by FY30.

[00:06:32]The 30 million ton slurry pipeline in Odisha is progressing well and is expected to be commissioned by FY27.

[00:06:39]The 1 million ton structural mill at Kadapa is progressing with equipment ordering underway and commission targeting by FY29.

[00:06:51]We are adding about 3 million tons of value-added capacities while we grow our steel capacities across galvanized electrical steel, tin plate, cold rolling, structural products, etc. And these projects are progressing well and will be commissioned between FY28 and 29.

[00:07:08]In addition, let me give you a little bit of update on the raw material side.

[00:07:12]On iron ore, we have 25 iron ore mines out of which 13 are currently operational. We are working on operationalizing the remaining mines as well as increasing the EC capacity at some of the operating ones.

[00:07:23]In Goa, we expect to operationalize two more mines in quarter one of FY28 by quarter one of FY28.

[00:07:31]As we increase our captive iron ore production, we are geographically optimizing our sourcing, thus reducing our logistics cost and lead times.

[00:07:39]The 2 million ton iron ore mine at Netrabandha uh which is now with the joint venture uh is now part of the uh you know, it's being commissioned in the quarter four, increasing the iron ore availability for the joint venture.

[00:07:54]On the cooking coal front as we mentioned earlier, uh Mozambique has the potential to yield 250 million tons of usable high-quality cooking coal. The mine will be developed in phases, and the first phase is targeted to be completed by mid calendar year 2008, producing around 5 million ton of usable cooking coal.

[00:08:16]In addition to the 30% stake in Illawarra, we have three mines and coal linkages in India, which together will provide around 5.5 million tons of cooking coal.

[00:08:25]Along with MDR, we will have approximately 10 million tons of captive cooking coal, meeting around 50% of our total cooking coal requirement by FY21.

[00:08:36]Coming to our operating performance, uh quarter four was characterized by strong volume growth and operational performance supported by efficient asset utilization and increased plant reliability due to uh digitalization efforts across our sites.

[00:08:52]This was reflected in the higher capacity utilization for the Indian operations, which stood at 96% excluding the BFC shutdown.

[00:09:02]The downstream capacity utilization also increased in quarter four to 95% that provided us higher uh VASP volume.

[00:09:10]Steel sales stood at around 8 million tons for quarter four and around 30 million tons for FY26, driven by improved domestic sales supported by growing steel demand in India.

[00:09:22]Our geographic and sectoral mix has improved.

[00:09:25]Uh automotive, packaging, alloy engineering uh sectors have increased. Also, branded sales constituted about 50% of our total retail sales, enhancing the overall value of the uh volumes.

[00:09:39]During the quarter, we reduced inventory by 700,000 tons and approximately 100,000 tons over the full year.

[00:09:45]We achieved 99% of our production guidance and 102% of our sales volume guidance for the year.

[00:09:53]Coming to the financial results, our consolidated revenues in quarter four crossed 51,000 100 crores, crossing 50,000 crores for the first time.

[00:10:04]Adjusted EBITDA stood at 9,713 crores with an EBITDA margin of 19%, while PAT stood at 19,243 crores.

[00:10:14]It is important to note that there was an exceptional gain of 17,888 crores in quarter four. This includes a gain of 18,051 crores on slump sale of BPSL steel undertaking and 163 crores exceptional charge on implementation of new labor code. The normalized PAT, excluding exceptionals for the quarter, was 3,475 crores.

[00:10:39]In FY26, the adjusted EBITDA stood at 32,048 crores and the normalized PAT, excluding exceptionals, was 8,700 crores.

[00:10:49]We transited from quarter three with one of the lowest steel prices, which has improved gradually post the imposition of safeguard duty and strengthened through March. Some part of this price recovery will be realized in quarter one FY27.

[00:11:04]On the cost side, we were impacted by higher cooking coal prices, which increased by about 16 dollars per ton.

[00:11:11]Iron ore costs were flatish in the quarter with 1/3 of captive iron ore usage in the quarter FY26.

[00:11:19]At our overseas operation, Q4 performance was better. At the plate and pipe mill in Texas, however, the Ohio operations production was impacted as activities ramped up in January 26 following the caster upgrades and extreme cold weather.

[00:11:33]Overall for FY26, the performance of US operations improved significantly reporting a EBITDA positive of 36 million dollars compared to an EBITDA loss of 35 million dollars in the previous year.

[00:11:46]The Italian operations also performed well in FY26 reporting an EBITDA of 16.4 million euros versus close to 15 million euros in the previous year.

[00:11:57]The BPSL transaction was driven has driven a structural deleveraging and transformed our balance sheet. Our net debt has declined and stood at 54,000 crores by the year end. Our revenue acceptances stood at 2.1 billion dollars.

[00:12:13]Leverage and gearing have dropped substantially to 1.81 and 0.51 respectively.

[00:12:19]The second tranche of equity investment in JVL is expected by end June which will drive further deleveraging of 7,900 crores approximately.

[00:12:29]We have also revised our stated maximum cap for gearing from 1.75 to 1.25 and leverage from 3.75 to 3.

[00:12:38]However, our comfort level will be to keep the leverage below 2.5.

[00:12:43]During the quarter, we incurred capex of 4,612 crores and 15,600 crores for FY26.

[00:12:51]The capex for our approved growth plan is 126,000 crores which will be spent over the next 4 to 5 years.

[00:12:59]We expect to spend about 22 to 24,000 crores in FY27.

[00:13:04]The JSW online platform uh in which we have about 61% equity stake on a fully diluted basis continued to see strong momentum during the year. In quarter four, it turned profitable for the first time. The steel volumes grew by 50% YOY and the GMB reached 6,200 crores, a 57% YOY increase.

[00:13:25]Over 2,000 crores of this GMB was driven by JSW ones credit offerings.

[00:13:31]Looking ahead, we expect our cooking coal cost to be higher by 12 to 15 dollars in quarter one.

[00:13:36]And for FY27, we expect consolidated steel production at 29.75 million ton and a sale of 28.6 million ton.

[00:13:45]This includes volumes from BMM Ispat, which is being acquired by us, but excludes volume from our JFE joint venture.

[00:13:54]We expect the domestic steel demand to grow at the rate of 7 to 9% in FY27 and JSW Steel is well positioned to support this growth.

[00:14:04]We'll be happy to take questions. Thank you.

[00:14:08]Thank you very much.

[00:14:09]We will now begin the question and answer session.

[00:14:12]Anyone who wishes to ask a question may press star and one on the touch tone telephone.

[00:14:18]If you wish to remove yourself from the question queue, you may press star and two.

[00:14:22]Participants are requested to use handsets while asking their question and to restrict to two questions at a time.

[00:14:29]Ladies and gentlemen, we will wait for a moment while the question queue assembles.

[00:14:36]We'll take our first question from the line of Vibhor Singhi from JP Morgan.

[00:14:40]Please go ahead.

[00:14:43]Yes, hi. Thanks for the opportunity and congratulations on the strong results.

[00:14:47]Uh the first question is uh basically on the raw material security given, you know, the target of 78 billion tons uh starting I don't know, maybe why you said the captive mix would be 50%. We have seen, you know, some of the global iron ore majors ramping up iron ore exports to JSW Steel. So, how confident are we in ramping up the captive mix from 1/3 currently to 50%? And how could be the mix for imports versus domestic sourcing? Just a put the right guidance on that, please.

[00:15:19]Right.

[00:15:20]Uh I'll answer that. Uh I'm Arun Maheshwari. Regarding this security of iron ore of 250% for the capital from the capital sources, uh, we today also we have a 50% EC capacity available for the iron ore within India for our own consumption.

[00:15:37]Uh, depending upon the logistics ratios, depending upon the proximity, depending upon the other sources available at that particular point of time, we define to use how much we should be taking out from the captive. So, that's how we decided to take only up to 1/3 of the consumption last year from our captive sources, even though the ECs were available up to 50% of our own consumption. So, this is how we we try to maximize our uh, logistical uh, advantages at different geographies because we are located in almost all geography of India.

[00:16:09]So, going forward also, we have continued to participate in the assets of iron ore within India. We have identified quite some more in Goa. We continue to look for something more in South. We have participated in Andhra Pradesh wherein we have secured out some concessions.

[00:16:23]Those are exploration licenses wherein we are doing more exploration. So, today we have 13 operational mines and about 12 exploration. So, we will continue to, you know, upgrade, keep on upgrading our captive sources available and we are confident that at a 62 million ton of JSW's volume, we will have our targeted volumes of captive sourcing.

[00:16:48]So, our total number of as we mentioned was 25 with total combined resources of about 1.7 billion tons without the mines which are under exploration right now. So, those will add to the resources.

[00:17:05]Okay. Okay, got it. That's that's good.

[00:17:07]And the second question is on the Middle East conflict. So, you know, we have been seeing that there's a reduction in commercial LPG supplies and some shortage of the gas as well. So, do you see any risk to the volume guidance if the conflict continues or you know, those issues are largely resolved in the guidance that you provided?

[00:17:27]Uh well, yes, LPG and the the gas supplies, LNGs has been recently cause of concern because of the Middle East disruption, but our exposure to the gas linked production is very limited in the overall production. However, it does have an impact >> on demand out pacing flats.

[00:17:56]So, any thoughts around longs expansion as well? I know you mentioned one of the acquisitions that you have done, but apart from that, are we planning to get active in longs as far as the downstream expansion is concerned?

[00:18:11]So, in the last announcements, if you recall, we have announced that the Kadapa section mill, which is a structural mill, which would go for beams and the expansion at our Raigarh facility, which would have beam and rails.

[00:18:26]So, those will be in long products. In the BMQ facility, which we have you know, just approved at the board for acquisition, which is the 1 million ton long facility, would be expanded to about 1.8 million ton.

[00:18:40]And that would also be in special engineering steel products. So, yeah, these would add to the long product capacities which we currently have.

[00:18:52]We believe that you know, India with the infrastructure growth would require long products and these would help in meeting those demands.

[00:19:05]Okay, fair enough. All right. Thank you, sir.

[00:19:08]Thank you.

[00:19:09]Next question is from the line of Amit Murarka from Axis Capital. Please go ahead.

[00:19:16]Yeah, good evening and thanks for the opportunity. So, just uh wanted to understand the thought on growth going ahead. Like earlier in the past we've seen that usually you have taken uh one project at a time.

[00:19:30]So, given that now you are indicating taking on multiple projects, so is it now the new normal like uh should we like look at the business now at three balance sheets like one standalone one, JSW JV, and one POSCO JV uh for for all your uh growth programs going ahead?

[00:19:49]From JSW Steel's perspective, if you see the slide which we have already given to you that by FY 30, JSW Steel alone will be at uh 49 uh uh million tons approximately. Can I see that slide, please?

[00:20:05]49 million ton uh and on top of that we would have the the joint venture uh of JSW JFE and including Ohio will be close to 55 million tons by FY 30.

[00:20:17]The uh expansion of JSW Steel alone in FY up to FY 32 would be to 62 million. So, what you would track for JSW Steel will be the 62 million tons.

[00:20:32]On top of this we have 10 million tons as we expect from the joint venture with JFE in the existing site and the 6 million ton new facility at POSCO. Those would be tracked uh again separately.

[00:20:46]And once both we get completed in the new sites, Paradeep and JSW instead of one site now we have Yeah.

[00:20:54]Yeah.

[00:20:55]And uh Mr. Rathore is just adding that uh step.

[00:20:59]Yeah, so like uh the Dolvi will get over in another 1 year or so. Then we will start this year we'll start Paradip and Vijayanagar. So, we'll have two sides instead of one side, each 5 million.

[00:21:15]So, yeah, that's the target we have taken.

[00:21:18]Uh no, my my question was more longer term. So, what I was trying to understand is like the usually in the past you've taken one project at a time and then moved ahead. So, is this now a new normal that you'll be taking up multiple projects through through the JV structure that is in place now?

[00:21:36]Yes, so as we had given it you know, given you an indication earlier that the idea of the JV was to strategically grow faster in the country uh while it helped us to deleverage as well. So, we'll have a double engine of growth, one with JSW Steel will grow on and the other with the joint venture will grow on.

[00:21:56]Uh we have also uh you know, we we have given you an indication that India is the fastest growing market and this is the right time to be able to take this opportunity and grow faster. That's the idea.

[00:22:09]And we would therefore to your answer is yes.

[00:22:12]We would be expanding faster along with the joint ventures.

[00:22:18]Right.

[00:22:19]And given the given that the pace of growth is going to be so high, uh like is there a plan to also kind of export I mean larger part of these volumes than what we are doing currently then?

[00:22:34]No, can you just repeat that once?

[00:22:35]Sorry, I missed that. Uh given that the pace of growth at a JSW including JV level is is going to be quite accelerated with like multiple capacities being done.

[00:22:46]So, is there also a plan to essentially raise exports to much higher percentage than what it is today in the current portfolio?

[00:22:54]We don't you know, we don't see the need as of now. The way you know, it is structured uh I think you will see probably more of domestic alignment. It's possible that when the capacity is incrementally maybe come up in the first 1 year or 2 years, you have a slightly higher export, but then come down. Having said that, but I would like to say that our Paradip facility, which is on the port, uh would be the natural place to export from. So, the exports from Paradip will naturally be higher than other sites.

[00:23:30]Um but you know, given the domestic growth as we have reiterated earlier, um our feeling is that this capacity will be required to meet the domestic growth which we are seeing today.

[00:23:47]If you're looking at a number of 230 million tons by the end of this decade and going beyond thereafter, unless capacities are put in place, I think India will not uh be able to meet this demand. I also mentioned a line I think we we believe that capacities are going to follow demand.

[00:24:11]And there will be a lag in the medium term up to 2030. Any capacity which you set up today takes 4 to 5 years minimum.

[00:24:18]So, when you start a project, keep that in mind.

[00:24:22]But we are quite confident that you know, with our faster pace of execution and low specific investment cost, we are well placed to uh you know, grow in India. And we are we are quite optimistic that this is in line with the growth and not in excess of the growth.

[00:24:42]Sir, could I ask a data question? Could I request you to join back the queue, please, as we have participants waiting for their turn?

[00:24:49]Thank you.

[00:24:51]Next question is from the line of Sumangal Nevatia from Kotak Securities.

[00:24:55]Please go ahead.

[00:24:57]Yeah, good evening and thanks for the opportunity.

[00:25:00]My first question is with respect to a JV with POSCO.

[00:25:04]Just want to understand better what is the rationale and what value does the new JV partner brings given that we already have a very strong balance sheet and we also have a lot of expertise access to expertise in value added products etc. given association with JFE. So uh just just some color on this. Thanks.

[00:25:32]So there are two reasons. One is that uh you know, both JFE and POSCO are leading uh global steel companies and both have their strengths on technology.

[00:25:43]Uh there are certain strengths which JFE we have been able to get along with JFE to India. CRJ being one of them and we have collaborated with them on many areas uh of improvements and we'll continue to do so.

[00:25:56]POSCO also has their own uh areas of technology and uh specially in the uh you know, high strength steels uh uh giga steels uh which uh you know, would go for lightweighting replacement of aluminum uh hydrogen technology to uh reduce emissions um uh digitalization and AI. I think those are areas of cooperation between POSCO and us. In addition to that uh POSCO has a 2 million ton uh cold rolling facility in Maharashtra and they would like to integrate backwards uh with a steel plant and uh one of their criterias for uh looking for a steel plant in India has been to have a backward integration of the steel from their own facility. So these are the two reasons.

[00:26:47]And that is largely because POSCO wanted to have wanted to have localization of sourcing and that is that is one of the primary reason even Posco wanted to come to India. Yeah.

[00:26:59]So going forward they want to buy rather than sending it from Korea they want to buy more steel from the local facility in India.

[00:27:07]Understood and just to have on this topic a bit more one is I mean how does our existing JV partner view association with new global players?

[00:27:19]Is there a potential conflict in future and I mean few years down the line we'll have three large plants supplying flat steel from Odisha.

[00:27:28]So will we have a different sales strategy, different targeted downstream products across the plants or they will just compete like independent plants?

[00:27:40]We do not foresee any conflict between the JV partners per se.

[00:27:45]They will have their own strategies for sure because they'll be different legal entities.

[00:27:51]But we see as we mentioned the growth of India is strong and therefore will enable all the entities to grow and Posco Maharashtra as I mentioned is a 2 million ton basically captive demand for the Posco facility which will come up.

[00:28:15]So keep that in mind as well. So that will be supplying basically 1/3 of their total new capacity to the downstream facility.

[00:28:27]So got it. Second question is Can I have Can I go for a second question?

[00:28:34]Yeah, please go ahead.

[00:28:36]Yeah, so just I mean on a broader level just want to understand given the overall macro issues in the country and the pressure on inflation.

[00:28:48]Do we see any risk of some withdrawal of protection given our domestic prices are enjoying 20% kind of uh uh higher uh prices due to the protection.

[00:29:00]Just some uh thoughts here also.

[00:29:04]I think we actually really look at uh protection. I would say India is probably one of the more balanced countries with respect to protection as you see it worldwide today.

[00:29:15]We are seeing protections between 25 to 50% in various parts of the world.

[00:29:20]Uh every country is trying to safeguard their uh uh shores from any kind of um trade flows which can be adverse for that country and that is becoming very critical to the supply chain resilience of that country.

[00:29:36]In India with a 11.5% safeguard duty, I think we are far lower than what the rest of the world is.

[00:29:43]That's number one.

[00:29:44]Number two, your comparison is with the lows of December.

[00:29:48]I would not do that. 3 years back in April '23, we had the same price as we had in April '26.

[00:29:57]The cost environment was uh similar if you were to look at coal and iron ore.

[00:30:01]But on top of that, the depreciation of the rupee has been severe.

[00:30:06]So, please look at the fact that your cost on account of the overall ecosystem has gone up.

[00:30:12]You have just come back to where you were 3 years back.

[00:30:16]I would say this more of a price correction and to make it a viable price system today.

[00:30:22]From international price perspective also, I think we are now well balanced.

[00:30:27]Yeah. We we uh we do not think that we are uh very much off the international prices as we see it today. If you look at uh you know, if by and large the uh Western economies, uh if you were to look at Europe and uh uh US, Europe is already in the range of 800 30 odd dollars uh of hot rolled coil and uh I think uh US is close to 1,100 dollars per metric ton of hot rolled coils.

[00:30:56]And Japan also and Korea also, internal prices are higher. So, we are price point of view also more balanced in India.

[00:31:05]Okay, that's very useful. Thanks and all the best.

[00:31:09]Next question is from the line of Pinakin from HSBC. Please go ahead.

[00:31:17]Yeah, thank you very much, sir. Uh my first question is uh if you look at the capital science of 126,000 crores over the next 4 to 5 years, uh that clearly does not capture the entire 30 million ton uh JSW Steel expansion and the 10.5 million ton at the JV. Uh so, if you take a step back, can you give us a broad range of the capex over the next 5 6 years to go from the current capacity base to 78.5 million ton capacity base and includes downstream mining, everything?

[00:31:51]So, currently, as we have given you the capacity uh expansion plans, our capex plans are at 126,000 crores um at as of now.

[00:32:02]Incrementally to be at 62 million plus invest for uh equity for the joint venture and our uh mining, other investments, downstream facilities, uh our sense is that we would uh require another 100,000 crores uh between now to um FY33.

[00:32:26]Uh because FY32 if we try and try to plan a capacity, the uh payment would be lowered at least to the next year. So, you have about 6 to 7 years, 7 years in which you would uh uh spread this uh capex.

[00:32:41]Of course, just to understand clearly, this 126 plus another 1 lakh crore, so 2 lakh 26,000 crore over the next, let's assume 6 to 7 years, right?

[00:32:52]FY27 is a 22,000 crore. So, the way we should look at it that in the coming years, the annual run rate of the capex will go from the 20 to the 30, 35,000 crore a year in the next couple of years as the projects, the multiple projects pick up pace.

[00:33:11]Yes, if this is including the joint venture projects, including the mining which we would, you know, additions which we would do in Mozambique.

[00:33:22]Including our own 62 million tons. It's a combination of all of them.

[00:33:29]Yes.

[00:33:30]Got it. And so, my second question is if I look at the guidance, right? If I give away BPSL from this year's base, it implies roughly 9, 9 and 1/2% of production growth in FY27.

[00:33:46]Given the timelines of the project commissionings that we have in terms of Dolvi, Vijayanagar, is it fair to say that this is the broad 8 to 10% CAGR that we can look at for the next 3 to 4 years?

[00:34:00]If I think if you see the guidance which we have given, if I recall we have given a guidance of 29.75 million tons, which on a like-to-like basis is a 13% growth in production. And a guidance of sales at 28.6 million tons is a 10% growth.

[00:34:18]Now, going forward, the capacities as you know, we are getting in capacities Vijayanagar and Dolvi put together, which would add about 7 million tons of uh between now to September 27.

[00:34:34]The Utkal facilities uh which have been taken up and the Vijayanagar facilities for expansion of another 10 million tons, etc. which has been taken up would be there by FY30.

[00:34:45]Um those will provide uh each of them will provide incremental EBITDAs for the next phase of growth.

[00:34:54]Got it. Got it. This is very helpful.

[00:34:56]Thank you very much, sir.

[00:34:58]Thank you. Next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.

[00:35:07]Pallav, your line is unmuted. Please go ahead with your question.

[00:35:10]Yeah, good evening, sir. Uh am I audible now?

[00:35:14]Yes.

[00:35:16]Yeah, so first question was on BM Ispat.

[00:35:18]So uh you know, I think uh will you share what was the actual production and you know, uh EBITDA number in FY25 for this company?

[00:35:29]Uh I think we'll request our investor uh you know, team you can reach out to them and take the uh details. I don't have it off off the off the cuff right now.

[00:35:40]Sure, sir. Because you know, I think >> But it's a facility of It's a facility of 0.9 million ton.

[00:35:45]Um uh just to give you an overview.

[00:35:49]So 0.9 million ton, so you can roughly producing in the in the range of I would say we would produce in the range of 0.8 million ton in this financial year.

[00:36:02]Sure, sir. Uh and also you know, if I look at the network, you know, I think uh probably it's worth about 2,700 crores as per the uh the press release on the stock exchange. So uh and you require about 6 and 1/2 thousand crores. So that's close to almost three times you know, uh price to book basis. So uh so is this factored in the future expansion that can happen, you know?

[00:36:25]No, so the current price uh at which this is uh this is acquired, uh represents multiple approaches, discounted cash flow, as well as replacement cost. It's roughly a million-ton plant.

[00:36:40]Also, the fact that it has a blast furnace, which is very new, which was commissioned only last year.

[00:36:46]Uh and if you take a normative EBITDA per ton of plant of this size, you will realize that the effective uh EV EBITDA is uh significantly attractive. Plus, the fact that this has potential uh to expand capacity almost double from here in in fairly short period of time. All of these factors, uh but the valuation we believe is is fairly attractive. Plus, this energy with our Vijayanagar location is very close to this. Yeah, on an expanded expanded basis, you're right that uh you know, this gives us the additional headroom because we feel the next 1 million or 0.9 million can be expect expanded between 1,600 to 1,800 crores, making the overall investment very attractive.

[00:37:33]Sure, sir. Just a second.

[00:37:35]I request you to jump back in the queue, please.

[00:37:40]Thank you.

[00:37:41]Next question is from the line of Parth Ojha from Anand Rathi. Please go ahead.

[00:37:48]Uh thank you for the opportunity and congratulations on completing the JV and further extending the relationship with the partner.

[00:37:57]I have two questions. The first question is pertaining to the steel prices, considering you know, this couple of days back or very recently, you know, a couple of companies from Vietnam, China have taken substantial price hike. And also, you know, your prices in Europe and USA are at reasonably high level. Uh just wanted to check if you can just give a number of what can we expect as far as your price increase in quarter one and uh say H1 going forward.

[00:38:26]Uh so in the month of April we have increased prices and we have increased some price uh for flat products in the month of May as well. I think we increased 2,000 in April and 1,000 in May for flat.

[00:38:42]Uh Our belief is that for now the price will be range bound.

[00:38:48]Um we will uh we will watch the geopolitical uh uh situation you know in the country and then take a view.

[00:38:57]As of now we believe this would be range bound going going into this quarter.

[00:39:02]And so just continuing to that question any contracts from auto which would be done at a much higher prices because I believe it's at a rolling basis, right?

[00:39:12]Yeah, it would. So auto gets recalibrated quarterly so the price increase for automotive will come in this quarter. The quarterly prices will get recalibrated. Those will be also in this quarter. You're right.

[00:39:25]Okay and any idea on the hike which we can expect from the from the price from the auto sector?

[00:39:31]I will not be able to give you numbers here but you know as we close the things it will come out in terms of And my second Yeah, my second question is pertaining to the your analyzed CAPEX run rate of about 30-35,000 odd crores going forward, right? I believe though you are very comfortable or say 27 considering you'll be your production and sales are at about 10-13% higher on a like-to-like basis and also the prices are good.

[00:39:58]However, going forward at a 35,000 crores of CAPEX on analyzed basis, would you start you know opting for more debt because for in the near term I think your cash flows might not match. If I'm not mistaken.

[00:40:14]Uh this [clears throat] is Swamy I'm If you factor in the capacity incremental capacity which are going to be available fully from now till next 1 and 1/2 years and that includes JVML which which is not at full capacity at in FY26 can do 1 million more.

[00:40:35]Uh BF3 which is going to start production once the capacity of radiation is completed that will give 2 million more.

[00:40:43]And Dolvi 80 which we expect to come in FY27.

[00:40:48]FY CY27.

[00:40:51]Now these three put together creates almost 8 million tons of extra production which will create anywhere between, you know, 9 to 12 thousand crore of EBITDA which is not in my base today.

[00:41:04]So if you take that out, you'll realize that even if as a company we stretch to to 35 30 to 35,000 crore of CapEx plan a part of it is going to get funded with the new cash I will generate.

[00:41:21]So if you exclude that, you'll realize that if from the base the kind of cash we are creating, we are not going to create very large stress to increase debt. But of course temporarily debt could still go up. But given where we stand right now which is at 1.8 net debt to EBITDA and our expectation is this leverage in FY27 perhaps will go slightly better especially after the second tranche of JV, we think we'll be very comfortable.

[00:41:49]So my basic my understanding was for Yeah.

[00:41:56]Yeah, go ahead, please.

[00:41:58]Yeah, yeah. And this my my my quick understanding was that Dolvi is expected in CY27. So the incremental benefit would be only from 29 onwards, right? So I think for 28 and 29 that is what my or I wanted you So these two years there would be some increase in debt, right? If I'm not mistaken.

[00:42:18]No, not really because you know, you will have BVM L which will start which will actually produce entire 5 million in FY27.

[00:42:27]Then you will have BF3 which will have some positive of taking in FY27, not fully. That would come in FY28. And in FY28 you will also see Dolby's part volume. Could be small. Okay. So, this combined will create incremental cash which you are not seeing in our base year. Without Dolby, just to sum up is 4 million tons at least you will see, you know, between now to FY27 including the BMM volume.

[00:42:52]That will give you additional cash flow.

[00:42:54]Till Dolby comes in. Dolby will start kicking in, let's say, after, let's say, October '27 to December '27 quarter they will start, let's say, operations and then ramp up capacity.

[00:43:07]Thank you.

[00:43:08]We'll take our next question from the line of Shubham