Volumes slide; EBITDA/ton improves
JTL Industries (JTL) delivered a mixed performance in Q2FY26. While volumes declined 21% YoY (25% QoQ) due to heavy rains disrupting dispatches, EBITDA/ton rebounded sharply by 47% QoQ/97% YoY to INR 4,247. The recovery was driven by i) inventory gains, ii) improved margins of INR 3,500/ton from DFT products (Q1FY26: INR-650/ton), and iii) better export realisation. The company revised its volume guidance to 450k–500k tons (earlier 500k tons), but maintained its EBITDA/ton guidance of INR4,000.
Given the miss on volumes and cut in guidance, we are cutting FY26E, FY27E and FY28E by 12% each. Retain ‘BUY’ with a TP of INR106 (earlier: INR110) on 18x Q2FY28E EPS.
Targeting 450,0000 tonnes in FY26E, 650,000 tons in FY27E
JTL’s Q2FY26 volumes declined 21% YoY to about 81,593 tons impacted by heavy rains and flooding in Punjab, which delayed dispatches and resulted in an estimated volume loss of about 23,000MT. The company has guided for volumes of 450,000 tons in FY26, 650,000 tons in FY27, 900,000 tons in FY28, and over 1,000,000 tons in FY29 as its new Mangaon facility ramps up. Management expects the VAP contribution to gradually rise as the new DFT line scales up and profitability from these products improves.
EBITDA/ton propelled by inventory gains and better VAP margins
EBITDA/ton improved 47% YoY/97% QoQ on the back of: i) inventory gains from usage of low-cost imported inventory; ii) higher margins on exports, and iii) better margins for VAP at INR3,500/ton (Q1FY26: INR-650/ton) for DFT products. Management maintained EBITDA/ton guidance of INR4,000 as the share of VAP from new DFT line increases. During the quarter, the share of VAP improved slightly to 23% (22% in Q1FY26), which is likely to improve further over coming quarters. However, the VAP mix has remained below the initial target of 50% due to lower margins from DFT-based products, which are therefore not classified as VAP.
Capacity expansion underway; NCLT approval received for RCI
JTL recently received the NCLT approval for acquisition RCI Industries, a manufacturer of diversified copper, brass, stainless steel and special alloy products. RCI has a one plant in Baddi, Himachal Pradesh, with capacity of 18,000MT from brass and copper strips and 2,000 tons for copper wires. JTL’s capacity expansion at its Mangaon facility in Maharashtra is going well with narrow-width HRC project expected to commissioned by mid-Q4FY26, large-width HRC project by the end of H1FY27 and API grade pipe expansion post-commissioning of large-width HRC
