Ind-Ra revises outlook on JSW Steel, NCDs to stable

India Ratings and Research (Ind-Ra) has affirmed AA rating on JSW Steel Ltd's (JSWL'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 due to close operational and strategic linkages between JSWL and its subsidiaries.

The outlook revision reflects an improvement in the steel sector's demand-supply situation over 2Q FY21 to 3Q FY21 and its likelihood over the medium term because of rising end-consumer demand.

This is likely to improve the credit metrics by FYE22, said Ind-Ra.

"The affirmation reflects 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."

JSWL has a significant cost advantage as it benefits from locational advantages, low manpower costs and operational efficiencies. Backward integration which will meet about 50 per cent of the company's iron ore requirements in FY22 will further strengthen its cost control.

Ind-Ra said the company has a dominant market share in southern and western India, and increasing value-added capacity is an added advantage. JSWL's strategic partnership with JFE Steel Corporation (Japan) for technology underpins the company's efforts to develop value-added products.

Besides, JSWL has a low conversion cost per tonne compared to its domestic peers, aiding its business strength.

At end-December 2020, JSWL had cash and cash equivalents of Rs 1,390 crore, unused fund-based and non-fund-based working capital limits of close to Rs 10,000 crore and an undrawn capital expenditure funding line of Rs 4,100 crore.

JSWL, a member of the JSW Group, is an integrated manufacturer of a diverse range of steel products with an export presence in over 100 countries. It has a total steel-making capacity of 18 million tonnes per annum and is among the leading producers and exporters of coated flat steel products in India.

( With inputs from ANI )