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Domestic Steel Sector: Safeguard duty led price hike to support profitability ahead

ICICIdirect Research 13 Feb 2026 DISCLAIMER

Results came largely in line with expectations with most players reporting healthy double-digit volume growth, driven by new capacities ramp-up and liquidation of inventory.
Net sales realization for the quarter declined by ₹2,500-₹3,000 per ton in Q3FY26, due to oversupply and higher cheap steel imports impacting domestic steel price.
Profitability was further impacted by higher coking coal cost to the tune of $4-5 per ton.
Notably,
SAIL reported the lowest decline in EBITDA/tonne among the domestic steel players. EBITDA/ton for the quarter stood at ~₹4,507/ton, down only ₹650/ton, led by lower employees and other operating expenses.
JSW Steel reported a marginal QoQ declined in EBITDA/ton by ~₹1,021/ton to ₹7,425/ton, aided by better product mix and cost optimization.
Tata Steel managed to limit its EBITDA/ton decline to ~₹1,800/ton QoQ at ₹13,381/ton, supported by cost savings and higher operating leverage.
However, Jindal Steel reported a sharp decline of ~₹4,000/ton QoQ in EBITDA/ton to ~₹7,165/ton, due to adverse product mix, lower by product sales, and one-time cost related to the commissioning of its new blast furnace.
Going ahead, the government imposing 12% safeguard duty in mid-December’25 has aided the recovery of domestic steel prices, which are already up by ~₹3,500/ton for the quarter.
Notably, domestic steel spot prices are already trading much higher by ~₹5,000/ton from December’25 lows of ~₹46,500/ton.
However, coking coal prices have risen by ~US$ 15-20/tonne QoQ, which will limit the profitability gains.
Consequently, we expect an EBITDA improvement of ~₹1,500 to ₹2,000 per ton among domestic steel players in Q4FY26.
Overall, we remain positive on the domestic steel space with Tata Steel as our top pick.
We maintain BUY rating on Tata Steel with SOTP-based target price of ₹250 (8.5x/4x EV/EBITDA to India/Europe business on FY28E), supported by its strategic capacity expansion in Indian operation and focus on cost savings across regions.
While we have a HOLD rating on JSW Steel with SOTP based target price of ₹1,300 (8.75x EV/EBITDA on FY28E).
Also, we have a HOLD rating on Jindal Steel with a target price of ₹1,200 (9x EV/EBITDA on FY28E).

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