International credit rating agency Fitch Ratings has announced that it has revised the outlook on Indian steelmaker JSW Steel Limited to negative from stable, and affirmed its credit rating at 'BB'.
Fitch said that the revision of the outlook reflects the risks in JSW's ability to deleverage and generate positive free cash flow (FCF) because of the various challenges in the Indian market. Apart from weak industry conditions, JSW's deleveraging and improvement in its FCF profile can be delayed by an increase in its planned capital expenditure or inability to stabilize and improve performance at acquired assets.
The credit rating agency expects a higher margin for JSW in the financial year 2020-21 based on normalizing raw material costs and stabilizing steel prices. Indian steel demand should also pick up, driven by government spending on infrastructure and better overall economic growth, supporting healthy volume growth for JSW. However, weak global steel demand and any increase in exports to India, possibly due to the impact on the global economy if the coronavirus prevails for a prolonged period, present risks.