India Ratings Cuts JSW Steel's Outlook

Release time：Nov 14, 2019 From：admin

India Ratings has affirmed JSW Steel’s long term issuer rating at IND AA but the outlook has been revised to Negative from Stable since the last rating was issued in March. citing an expected increase in the steel major’s net debt-based leverage. It said “JSW Steel’s adjusted net debt to Ebitda is expected to rise to 3.5 - 3.7 times this financial year on the back of a decline in per tonne Ebitda and outflows on account of debt-led capital expenditure. In FY19 and FY18, the leverage was 2.2 times and 2.6 times respectively.”

The rating agency expects outflows relating to any inorganic stressed asset acquisition in FY20 to be limited toINR 5,000 crore and primarily to be executed through ring- fenced financial structures with only a minority stake byJSW Steel. India Ratings also expects JSW Steel’s FY20 liquidity to remain adequate with well-planned debt refinancing amid substantial capital expenditure outflows.

JSW has announced reduction in the budgeted capital expenditure by about INR 4,700 crore to about INR 11,000 in FY20 as a measure to conserve cash in the background of benign economic situation. The company has also deferred capex at its Baytown, Texas facility by around USD 240 million of the announced USD 500 million.