Fitch’s India Ratings and Research reaffirms ‘IND BBB’ to Jindal Stainless Limited with stable outlook

Ind-Ra has expressed confidence in the Company as domestic and export markets for stainless steel are expected to recover to pre-Covid-19 levels by 2HFY21. An Rs 800 crore fund recently raised by JSL has also been assigned ‘BBB’ rating.

Jindal Stainless Ltd (JSL), India’s largest stainless steel producer, has been reaffirmed a long-term issuer rating of ‘BBB’ with a stable outlook by India Ratings and Research (Ind-Ra). The company sustained its rating despite operational disruptions caused due to Covid-19. This is a testimony to the increased financial flexibility of JSL after its CDR exit and its consistent efforts for debt reduction. Ind-Ra has expressed confidence in the Company as domestic and export markets for stainless steel are expected to recover to pre-Covid-19 levels by 2HFY21. An Rs 800 crore fund recently raised by JSL has also been assigned ‘BBB’ rating.

Commenting on this development, Managing Director, JSL, Abhyuday Jindal said, “The consistent rating emphasizes JSL’s comfortable debt and improved financial position. The report suggests an early recovery for stainless steel sector post-Covid-19; a revival we are already witnessing. Our focus on operational efficiency and cost reduction, as mentioned in the report, will be sustained in the future as well.”

As per Ind-Ra report, JSL’s rating has been sustained because of “increased financial flexibility post exiting from Corporate Debt Restructuring”. States the report, “JSL can now pursue growth plans and look at diversifying its funding sources at more competitive rates….A continuous debt reduction through healthy operating free cash flows driven by strong EBITDA/tonne, healthy volume growth, modest capex, and a reduction in the net working capital cycle” has helped JSL to further consolidate its position. The report suggests a recovery in JSL based on “consolidated sales and profitability by 2HFY21 to the pre-Covid-19 levels, supported by JSL’s global market presence and resilient demand for stainless steel products”. Commenting on the external trade environment, the Report states, “imports in India from Free Trade Agreement (FTA) countries might continue exerting pressure on realisations and margins to some extent, as the global demand remains sluggish in the near term.”