Moody's on March 6 upgraded India's JSW Steel Ltd.'s corporate family rating and senior unsecured debt rating to Ba2 and Ba3, respectively, assigning a stable outlook to the ratings.
The rating agency attributed the move to the company's improving credit metrics owing to higher steel sales amid rising demand in India. JSW's revenue is likely to rise in the mid-single-digit percentages over the next 12 to 18 months, while EBITDA margins will remain at 20% to 22% despite rising raw material prices.
"Rising domestic demand, a wide slate of long and flat products, and an increasing proportion of value-added products will help JSW in preserving its market share in India. These factors, along with a favorable pricing environment, will improve the company's earnings growth," Moody's said, noting that CapEx used for a 5 million-tonne-per-annum brownfield expansion at the company's Dolvi plant will likely lead to a prolonged negative free cash flow situation.
