315.4% profit growth: This steel PSU trades at a 43% discount to JSW
The domestic steel industry is in the midst of a boom – production is expanding at the fastest pace globally in the current calendar year amidst surging demand from user industries. SAIL reported a 315.4% y-o-y growth in net profit in the September 2026 quarter, faster than larger rival, JSW Steel. However, SAIL trades at nearly 43% discount to JSW Steel.
It’s a dilemma that investors have faced for the past several months – the domestic steel industry is in the midst of a boom (view below) thanks to a rapid expansion in capacity and production, at a time when there is strong demand from key user industries over the past few quarters. However, the government-controlled SAIL trades at nearly 43% discount to larger rival, JSW Steel (view table below).
To give readers greater insight, we looked at the boom in the domestic steel sector, and how the two players, SAIL and JSW Steel, who have declared their September 2026 quarter results, are leveraging this boom. Tata Steel, a leading global and domestic manufacturer, will declare its quarterly results on 7 November. FE Stock Insights on WhatsApPGet instant alerts on high-conviction investment themes and fundamental deep dives—direct from Financial Express.Join now Global Steel Dynamics: Why India is Outpacing China in 2026 Indian steel production grew 5.6% y-o-y to 130 million tonnes during the period January to September 2026, according to the global industry body, worldsteel.org.
The domestic steel industry’s production was among the fastest growing this calendar year, among the five leading steel producing countries. In contrast, Chinese steel production fell 2.9% y-o-y to 724.8 million tonnes during this period. Sluggish steel production in China, the world’s largest steel producer, can be attributed to no signs of recovery in key user industry – the real estate sector. Sluggish steel production in China has led to broadly higher steel prices across the globe.
The 5 leading steel producing countries are China, India, USA, Japan and Russia. Here is an insight into the performance of two leading steel players in the September 2026 quarter, amidst the boom in the domestic steel industry. SAIL’s Q2 Margins: How Flat Product Demand Drove the 315% Profit Surge The government-controlled company sold 5.2 million tonnes of steel as compared to 4.9 million tonnes a year earlier, with strong demand for flat products, that accounted for nearly 52.4% as compared to 49.3% a year earlier.
Flat steel products are used for making cars and white goods. The auto industry including two-wheelers, four-wheelers and commercial vehicles has seen strong growth over the past few quarters and this in turn has helped steel makers. SAIL’s realisations grew an estimated 12.9% to Rs 61,532 per tonne in the quarter. Steel prices, globally, have shown an uptrend on account of sluggish production in the key Chinese market coupled with higher tariffs on imported steel.
The Volume vs. Value Showdown: Dissecting Q2 Operational Deliveries Operational parameterSAIL (standalone)JSW SteelSteel sales / deliveries (million tonne)5.27.46Net sales growth y-o-y (in %)19.8%20.7%Net profit growth y-o-y (in %)315.4%225.6%Source – Screener.in, Company results and investor presentations As a result, SAIL’s standalone revenue from operations grew 19.8% y-o-y to Rs 31,997.5 crore in the quarter.
Higher realisations also helped the company’s operating profit margin rise 370 basis points y-o-y to 13.2% in the quarter. A strong operational performance helped SAIL’s standalone net profit rise a buoyant 315.4% y-o-y to Rs 1,773.7 crore in the quarter. The government-controlled SAIL’s steel capacity was nearly 19 million tonnes at the end of FY26, and broadly similar to a year earlier. JSW’s Record Volumes: The Impact of the Vijayanagar Capacity Ramp-Up JSW Steel highlighted its consolidated sales volume grew 13% y-o-y to 7.46 million tonnes in the quarter.
Its sales in the quarter were the highest ever, and sales of flat products were up 16% y-o-y. Also, sales to the local auto sector were up 36% y-o-y in the quarter, and they were the highest ever. JSW Steel on a consolidated basis has operations in India, USA and Italy, with sales in the local market remaining key – steel sales in the local market were 7.27 million tonnes, a rise of 14% y-o-y. Enhanced production for the company in the quarter is attributed to ramp up of Vijayanagar BF-3, Karnataka.
The company’s realisations also grew nearly 7% y-o-y to Rs 73,037 per tonne in the quarter. As a result, the company’s consolidated total revenue from operations rose 20.7% y-o-y to Rs 54,486 crore in the quarter. Its operating profit margin also rose nearly 280 basis points y-o-y to 18.6% in the quarter. 6% y-o-y to Rs 5,359 crore in the quarter. JSW Steel has a combined crude steel capacity of 37.9 millon tonnes including 4.5 million tonnes through the JSW JFE Steel JV, at the end of the September 2026 quarter.
JSW Steel’s crude steel installed capacity of 34.2 million tonnes at the end of FY25. Capital Allocation: Why JSW Dominates SAIL in Return on Equity JSW Steel has a consolidated return on equity (RoE) of 10.2%, according to Screener.in. SAIL has a standalone RoE of 6.6%. JSW Steel marches ahead in efficiency Steel companyReturn on Equity (in %)JSW Steel10.2%SAIL (standalone)6.6%Source – Screener.in The 43% Valuation Gap: How Capacity Stagnation Weighs on SAIL’s Multiples JSW Steel trades at a consolidated P/E of 19.4, according to Screener.in.
SAIL trades at a standalone P/E of 11.1. SAIL - Is the nearly 43% valuation discount to larger peer justified? Steel companyP/E (x)JSW Steel19.4SAIL (standalone)11.1Source-Screener.in The festive season is currently underway, and Diwali is only a few days away. Investors are closely watching demand from the key user industries of steel – autos, white goods, real estate and infrastructure sector. Also, with the Middle East crisis showing no signs of ending, investors are keeping a close eye on key input prices for steel industry, like coking coal and freight costs, amongst others.
SAIL’s steel capacity has been broadly flat over the past few years, in contrast to the rapid expansion in capacity made by larger peers, like JSW Steel. SAIL trades at a discount of nearly 43% to JSW Steel, with investors viewing the larger player as easily able to expand its market share, going forward, and the resulting premium valuation. 4% profit growth, 68% valuation discount: Meet Bajaj Finance’s smaller rival Readers can put SAIL and other steel stocks on their watch list of stocks for 2026, and see if their performance matches expectations.
The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
