Fitch Ratings has revised the outlook on Indian steelmaker Tata Steel’s issuer default rating (IDR) to ‘negative’, from ‘stable’, and has affirmed the IDR at ‘BBB-’, according to a statement from the rating firm on Thursday, July 18.
According to the statement, the negative outlook reflects uncertainty surrounding the turnaround of Tata Steel’s UK operations and risks to Fitch’s forecast that the company’s earnings before interest, tax, depreciation and amortisation (EBITDA) leverage may improve to below 3.0x by the financial year ending 2024-25.
The change in the UK government and labour union actions to prevent job losses at Tata Steel’s UK operations may delay its plan to reduce losses through the current fiscal year.
“We expect robust growth in Indian operations and likely EBITDA profits at Dutch operations in FY 2024-25 may offset any losses at UK operations,” Fitch Ratings said.