India Metals & Mining Q1FY27 Preview: EBITDA/t Expected to Rise QoQ, but Seasonal Pressure in Q2 to Intensify

Overview

This report is Goldman Sachs' Q1FY27 earnings preview for the Indian metals and mining sector, focusing primarily on JSW Steel, Tata Steel, Jindal Steel, Shyam Metalics, and NMDC. The report believes that the QoQ improvement in domestic steel companies' Q1FY27 earnings will mainly come from higher realized steel prices, but rising coking coal costs, seasonally weaker volumes, and one-off energy costs will compress the increase in EBITDA/t. In Q2FY27, lower spot steel prices and higher raw material costs are expected to drive a decline in sector EBITDA/t.

Core views

The key views are as follows: First, EBITDA/t for the India operations of covered steel companies is expected to rise by INR 1,500-2,000 QoQ in Q1FY27, as a INR 4,500-5,500/t increase in realized prices offsets cost pressures. Second, Jindal Steel's shipments are expected to grow 13% YoY, supported by the ramp-up of its new Angul blast furnace. Third, Shyam Metalics is expected to perform best, as higher volumes of value-added products such as CR coil and stainless steel drive consolidated EBITDA up 28% YoY to INR 7.5bn. Fourth, off-season pressure in Q2FY27 will be significant, with long steel prices falling more than flat steel prices; JSW Steel and Shyam Metalics should show greater relative resilience. Fifth, although NMDC benefits from higher iron ore prices, lower Q2 volumes may offset the price benefit.

Analysis framework

The report combines a top-down assessment of industry conditions with a bottom-up company earnings preview: it first analyzes Indian steel production, consumption, and flat and long steel supply-demand, then evaluates the impact of realized steel prices, coking coal costs, iron ore prices, volumes, product mix, and one-off energy costs on each company's EBITDA, EBITDA/t, earnings, and valuation.

Methodology notes

• Valuation methodsEV/EBITDA multiple

  Valuation based on FY28E EBITDA multiplied by the target multiple

  JSW Steel is valued at 9x FY28E EBITDA, Jindal Steel at 7.5x FY28E EBITDA, Shyam Metalics at 7.0x FY28E EBITDA, and NMDC at 6x two-year forward average EV/EBITDA.

• Valuation methodsSOTP

  Sum-of-the-parts valuation

  Tata Steel is valued using an SoTP methodology, with its India operations valued at 7.5x FY28E EBITDA and international operations at 5x FY28E EBITDA, implying a 12-month target price of INR 218/sh.

• factor_modelGS Factor Profile

  Comparison of growth, financial returns, valuation multiples, and composite percentiles

  The Goldman Sachs factor framework uses analyst forecasts to standardize and rank stocks on metrics including sales growth, EBITDA growth, EPS growth, ROE, ROCE, CROCI, P/E, P/B, and EV/EBITDA, providing a relative investment context.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• JSW Steel

  Covered Indian steel company, Buy rating

  Strengths

  Higher flat steel exposure, improved domestic realized prices, and potentially narrower losses at Ohio operations; the company has significant expansion plans and cost-efficiency advantages.

  Weaknesses

  Higher coking coal costs and the removal of BPSL EBITDA resulted in a 4% reduction in FY27 EBITDA estimates and a 14% reduction in PAT estimates.

  Comparison

  In an environment where long steel prices fall more than flat steel prices in Q2FY27, it is more defensive than companies with higher long steel exposure.

  Risks

  Cyclical decline in steel prices, rising leverage during a downcycle, delays in improving raw material security, and delays in capacity expansion.

• Shyam Metalics and Energy Ltd

  Covered Indian steel and metals company, Buy rating

  Strengths

  Ramp-up of value-added products such as CR coil, stainless steel, and Pig Iron is expected to drive Q1FY27 EBITDA up 28% YoY to INR 7.5bn; low leverage and product diversification support earnings resilience.

  Weaknesses

  GSe EBITDA margin is expected to be 13.4%, down 50bps QoQ, while insufficient raw material security may compress spreads.

  Comparison

  The report expects it to outperform peers in Q1 and to benefit relatively in Q2 from growth in value-added product volumes.

  Risks

  Steel price cyclicality, spread compression caused by insufficient raw material security, and project completion delays.

• Jindal Steel Ltd.

  Covered Indian steel company, Neutral rating

  Strengths

  The ramp-up of the new Angul blast furnace is expected to drive shipments up 13% YoY to 2.15mt; low leverage, cost reduction initiatives, and higher captive coal production provide potential support.

  Weaknesses

  Consolidated EBITDA is expected to decline 8% YoY to INR 27.5bn, pressured by higher costs and falling long steel prices.

  Comparison

  Volume growth is strong, but the sharp decline in long steel prices weakens earnings elasticity.

  Risks

  Steel price cyclicality and flat steel competition; upside risks include stronger-than-expected volume growth and benefits from cost reduction initiatives.

• Tata Steel Ltd.

  Covered Indian and European steel company, Neutral rating

  Strengths

  The India business is highly integrated, with 100% iron ore security and 25% coking coal security; standalone EBITDA/t is expected to show one of the highest QoQ increases among peers.

  Weaknesses

  Tata Steel Netherlands is affected by the closure of Coke and Gas plants and reliance on purchased coke; European decarbonization costs and uncertainty surrounding auctions of Indian iron ore mines after FY30E remain concerns.

  Comparison

  Earnings improvement depends on higher realized prices from the India business and automotive contracts, but risks in overseas operations continue to constrain the rating.

  Risks

  Steel price cyclicality, particularly affecting European operations; higher-than-expected European decarbonization costs; upside risks include lower-than-expected increases in iron ore costs after FY30E and faster expansion.

• NMDC Limited

  Indian iron ore producer, Sell rating

  Strengths

  India's largest iron ore producer, with FY26 high-grade iron ore production of 53.5mt and a target of reaching 100mtpa of production and evacuation capacity by FY30E.

  Weaknesses

  Q1FY27 volumes rose only 2% YoY to 11.8mt, while average prices declined; in Q2, the benefit from higher iron ore prices may be offset by lower volumes.

  Comparison

  Compared with covered steel companies, which are expected to deliver 25-30% EBITDA CAGR through FY28E, NMDC is expected to deliver EBITDA CAGR of only 11%.

  Risks

  Upside risks include accelerated expansion, retention of the existing customer base, and faster collection of receivables from RINL and NSL.

Key data

• Indian crude steel production27.9mt, up 5.6% YoY in Apr-May 2026SteelMint data.
• Indian steel consumption24.5mt, up 7.5% YoY in Apr-May 2026Long steel accounted for 56.4% of total consumption during the period, down approximately 40bps YoY.
• Flat steel supply and demandProduction 10.9mt, up 9.3% YoY; consumption 10.7mt, up 8.4% YoYThe report considers flat steel to be slightly oversupplied.
• Long steel supply and demandProduction and consumption both at 13.8mt; production up 3.2% YoY and consumption up 7.0% YoYThe long steel market is relatively balanced, but spot prices fell more sharply in Q2.
• Q1FY27 realized price change for steel companiesAverage QoQ increase of approximately INR 4,500/t; INR 4,500-5,500/t for some companiesHigher realized prices were the main source of the improvement in Q1 EBITDA/t.
• Q1FY27 EBITDA/t change for steel companiesExpected QoQ increase of INR 1,500-2,000Offset by coking coal, energy, and volume pressures.
• Coking coal cost impactIncrease of USD 18-25/tJSW Steel is expected to face an adverse impact of USD 18/t.
• JSW Steel EBITDAConsolidated EBITDA expected at INR 85.6bn, up 13% YoYMainly driven by higher domestic realized prices.
• Tata Steel EBITDAConsolidated EBITDA expected at INR 91.1bn, up 23% YoYDriven by standalone operations; standalone EBITDA/t is expected to increase by INR 2,160 QoQ.
• Jindal Steel EBITDAConsolidated EBITDA expected at INR 27.5bn, down 8% YoYHigher costs are a drag, but shipments are expected to rise 13% YoY to 2.15mt.
• Shyam Metalics EBITDAConsolidated EBITDA expected at INR 7.5bn, up 28% YoYThe report says this could be a record high, driven by the ramp-up of Pig Iron and CR coil capacity.
• NMDC EBITDAExpected at INR 23.2bn, down 6% YoYLower average prices and volume factors weigh on margins.
• Q2FY27 steel price changeSpot long steel prices down 8.8% from Q1FY27; flat steel prices down 0.6-0.7%Flat steel prices showed greater resilience.
• Q2FY27 raw material spreadRaw material spread down 5% from Q1FY27Spot coking coal prices rose 3% from the Q1FY27 average.

Impact & implications

The investment implication is that Indian steel sector earnings may improve QoQ in Q1FY27, but investors should focus more on the Q2FY27 off-season, narrowing raw material spreads, and divergence in product mix. Companies with greater flat steel exposure, rising volumes of value-added products, or implemented cost initiatives are more likely to outperform; companies with higher long steel exposure, weaker external raw material security, or volume pressure face greater risks of earnings decline.

Risks

• Seasonally weak demand in Q2FY27 could drive declines in volumes and EBITDA/t.
• Higher coking coal prices and a one-off energy cost shock could compress steel companies' earnings elasticity.
• Long steel prices are falling significantly more than flat steel prices, placing greater pressure on companies with higher long steel exposure.
• Raw material spreads are down 5% from Q1FY27, which could weigh on future margins.
• A cyclical decline in steel prices, delays in capacity expansion, delays in improving raw material security, and higher-than-expected European decarbonization costs could all affect the investment thesis.

What to watch

• Trends in Q2FY27 spot long and flat steel prices and changes in the spread.
• Whether coking coal prices, domestic iron ore prices, and raw material spreads continue to deteriorate.
• JSW Steel's flat steel price resilience, progress in narrowing losses at Ohio operations, and the impact of estimate adjustments following the BPSL transaction.
• The ramp-up of Jindal Steel's new Angul blast furnace, shipment growth, and delivery of cost reduction initiatives.
• Shyam Metalics' value-added product volumes, CR coil and Pig Iron capacity ramp-up, and whether its EBITDA margin remains stable.
• NMDC's iron ore volumes and prices, and progress on approvals for FY30E capacity expansion.