India Ratings and Research has reaffirmed JSW Steel's rating at 'IND AA' with outlook revised to 'stable' from 'negative'.
India Ratings and Research (Ind-Ra) has affirmed AA rating on JSW Steel's long-term issuer rating and Rs 10,000 crore non-convertible debentures (NCDs).
The agency also revised its outlook on both to stable from negative. The agency continues to take a consolidated view of JSW Steel and its subsidiaries because of the close operational and strategic linkages among them.
India Ratings said that the outlook revision reflects the improvement in the steel sector's demand-supply situation over 2QFY21-3QFY21 and the likelihood of the same sustaining over the medium term owing to rising end-consumer demand. This is likely to improve the credit metrics by FYE22.
The affirmation reflects the continued comfort from JSWL's strong business profile on the back of its low-cost position, improving backward integration and adequate liquidity management in the prevailing challenging environment.
The credit ratings agency said that any significant decrease in the EBITDA/tonne and/or a higher-than-expected debt-led capex or acquisition, leading to the consolidated net leverage (including acceptance) remaining above 3.5x on a sustained basis after FY22 could be negative for the ratings.
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A sustained weak liquidity cushion and or inability to ease the debt maturities schedule would also be viewed negatively, it added.
JSW Steel is India's largest steel exporter, shipping to over 100 countries across 5 continents. It is India's leading manufacturer of value-added and high-grade steel products. With plants in Karnataka, Tamil Nadu and Maharashtra, the company has the capacity to produce 18 million tons per annum (MTPA).
On a consolidated basis, the steel major's net profit jumped nearly 13 times to Rs 2681 crore in Q3 FY21 over Q3 FY20. Revenue from operations grew by 21% to Rs 21,859 crore in Q3 FY21 over Q3 FY20.
The scrip rose 1.24% to end at Rs 419.15 on the BSE Friday.
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