Jindal Saw Profit Plummets 75% Amid Export Woes and Global Supply Chain Disruptions

Jindal Saw Profit Plummets 75% Amid Export Woes and Global Supply Chain Disruptions​

Jindal Saw reported a significant decline in its consolidated net profit for the first quarter of FY27, reflecting severe operational headwinds and challenges across its global business segments. The company's consolidated net profit fell by 75.47 percent to Rs 104 crore for the June quarter. This marks a stark contrast from the corresponding period last year when the company posted a consolidated net profit of Rs 424 crore.

Net Profit Decline Despite Revenue Growth​

While the profitability saw a steep contraction, Jindal Saw managed to register a rise in revenue from operations during the April-June period. The total operating revenue climbed by 9 percent, reaching Rs 4,452 crore when compared to Rs 4,085 crore in the previous year. This juxtaposition highlights that core business activity is generating higher sales, but translating this top-line growth into bottom-line profits remains challenging for the company.

Geopolitical Instability and Operational Hurdles Cited​

The primary driver behind the sharp profitability decline was identified as weak export operations and ongoing issues within its water pipe business. Jindal Saw stated that its export operations in the first quarter of FY27 were negatively affected by persistent geopolitical instability prevalent in the MENA region.

Operations at the company's Abu Dhabi unit also faced constraints due to disruptions in maritime routes across the MENA region. These combined factors led to supply chain difficulties and operational limitations, directly impacting the overall financial performance of the unit during the quarter.

Global Strategy Shift through Joint Ventures​

In a move aimed at securing future growth and stabilizing operations, Jindal Saw has announced strategic joint ventures. The company launched a partnership with Buhur Investment Company in Saudi Arabia to establish dedicated production lines for HSAW and LSAW pipes. This venture is structured as a 51 percent step-down subsidiary of the company.

The new infrastructure holds substantial capacity, promising 3,00,000 tonnes per annum each for both HSAW and LSAW pipes. Furthermore, Jindal Saw confirmed signing a joint venture agreement specifically for its ductile iron pipe facility in Saudi Arabia, with other corporate actions currently being processed.

Domestic Challenges and Order Backlog Status​

Despite the proactive steps taken internationally, the domestic water pipe business within India continues to face difficulties. This segment of the business has been facing challenges throughout FY26 and extended into the first quarter of FY27.

However, the company maintains a substantial order backlog, which is estimated at over a year for its ductile iron pipes in the Indian market. Looking ahead, Jindal Saw reported an order book amounting to about USD 1,171 million for the fourth quarter of FY26. This includes approximately USD 1,164 million for iron and steel pipes and about USD 7 million dedicated to pellets.

Market Reaction Following Earnings Announcement​

Following the disclosure of these quarterly results, shares of Jindal Saw saw a decline in the market. The stock fell to an intraday low of Rs 253.15 before settling at Rs 260, registering a 3.2 percent drop.