Is India’s steel sector preparing for a double whammy – lower steel margins under pressure? According to the Kotak Institutional Equities report, the Indian steel majors are likely to see a Rs 1,530 per tonne margin decrease in Q3 FY26. This is primarily due to lower steel prices.
The big challenge for steel manufacturers in Q3
The Kotak report stated that the selling price for most steel majors fell by about Rs 2060 per tonne in Q3FY26 compared to Q2FY26. While the higher output and lower iron ore costs in the quarter provided leverage, these gains were offset by higher coking coal prices.
The effect was more pronounced in flat steel products, such as HR coils, sheets, and plates, compared to long products like rods and rebars, as safeguard duties were not in effect in November and December.
Here is a look at how the third quarter of FY26 is expected to play out for the leading steel players in India-
JSW Steel
Kotak Institutional Equities estimates JSW Steel‘s standalone EBITDA per tonne to be Rs 7,580/tonne in the quarter, a decrease of 19% QoQ and 3.6% YoY. The report says that the primary reason for the company’s EBITDA decline is the lower price realisation and higher coal prices.
The company is expected to post a 1.3 YoY and 5% QoQ standalone volume decline in Q3 FY26 to 5.5 million tonnes. Its steel realisations are expected to decrease by 4% YoY and 3.4% QoQ.
Tata Steel
Kotak reported that Tata Steel is likely to see a standalone output of 6 million tonnes in the quarter, increasing 14.4% YoY and 9% QoQ. However, the company’s EBITDA per tonne is expected to decrease 9.7% QoQ to Rs 13,033/tonne.
The company’s European business is expected to report an EBITDA decline of $12/tonne, with the Netherlands market, its biggest market in Europe, to see an EBITDA decline of $43 per tonne.
Jindal Steel
Jindal Steel is expected to see a 17% YoY and 19 % YoY volume growth in the quarter. However, the company’s steel realisation is expected to decline by 4.1% QoQ and 3.1% YoY.
Kotak estimates Jindal Steel’s EBITDA/tonne to stand at Rs7,932/tonne in the quarter, declining 29% YoY and 21% QoQ due to lower realisations and higher costs on coal prices and ramp up of new capacities.
SAIL
As per the Kotak report, Steel Authority of India is likely to see 6% YoY and 2.3% QoQ volume growth in Q3 FY26. However, the company’s steel realisation is expected to decrease by 3.1% on a quarterly basis.
The company’s EBITDA per ton is expected to decrease 15% QoQ to Rs 4,662 per ton.
As most of the steel majors are set to release their Q3 results this month, investors will look at how much the companies’ net profit will be affected by margin declines and whether output growth in the quarter can offset the margin effect.