Moody’s Investor Service has revised its outlook for Indian steel producer JSW Limited to ‘stable’ from ‘positive’ and affirmed the company’s Ba2 rating on corporate family rating and senior unsecured US dollar notes on the back of its weaker-than-expected operating performance and the rise in execution risks following the acquisition of Bhushan Steel and Power (BSPL), a report of international ratings agency Moody said.
“The change in outlook to stable reflects JSW's weaker-than-expected operating performance, and our expectation that it will take longer for the company's credit metrics to improve to levels that warrant a higher rating," Moody's vice president Kaustubh Chaubal said.
The revised rating incorporated JSW’s exposure to the cyclical steel industry, its relatively limited raw material integration, and risk associated with the execution of BSPL, even though the acquisition of the latter was strategic and integral to JSW’s long-term growth, Moody report said.
The revised stable outlook for JSW reflects Moody’s expectations that the company’s operating performance will continue to improve on the back of enhanced capacity after the brownfield expansion of Dolvi steel mill in the western Indian state of Maharashtra.
In January this year, JSW produced 1.41 million mt of crude steel, showing a decrease of three percent year on year.