Fitch upgrades JSW Steel to 'BB+' with Positive Outlook on deleveraging, JV proceeds
New Delhi, July 6
Fitch Ratings has upgraded JSW Steel Limited's Long-Term Issuer Default Rating and senior unsecured bonds to 'BB+' from 'BB', and removed the ratings from Rating Watch Positive, the company said in an exchange filing on Monday. The outlook is now Positive on the company, JSW said in a press release citing the rating agency's report.
The upgrade follows JSW Steel receiving Rs 294 billion in March 2026 and Rs 79 billion in June 2026 from the sale of steel assets to JSW JFE Kalinga Steel Limited (JJKSL), its newly formed 50:50 JV with Japan's JFE Steel Corporation.
Fitch said the upgrade reflects its expectation that EBITDA net leverage, including proportionate consolidation of JJKSL, will remain below 2.7x and could improve further to around 2.0x from FY27. A sustained fall below 2.0x could trigger an upgrade to 'BBB-'. Leverage was 4.0x in FY25 and is estimated at 2.5x in FY26.
Fitch expects deleveraging to be aided by rising EBITDA, cost efficiencies and debt reduction using JJKSL proceeds, even as capex stays high and free cash flow remains negative. JSW has also set lower public net debt/EBITDA and net debt/equity targets.
Standalone EBITDA/tonne is forecast at INR10,750 in FY27 and INR11,250 in FY28, up from around INR9,700 in FY26. Support comes from India's 11 per cent-12 per cent safeguard duties on certain steel imports until April 2028, strong domestic demand, and easing iron ore prices.
Sales volume is projected to grow about 8 per cent annually over FY28-FY30, driven by the 5 mtpa brownfield expansion at Dolvi, debottlenecking, and the merger of BMM Ispat. Fitch expects India's steel consumption to expand 8 per cent on infrastructure, construction and manufacturing demand.
JSW has raised its capex plan to INR230-275 billion annually over FY27-FY29 as it targets 50.3 mtpa capacity by FY30, up from 44.4 mtpa earlier. Equity investment in JJKSL and a new JV with POSCO is pegged at INR21 billion a year over FY28-FY31, with limited impact on metrics. The two JVs are expected to add 11.5 mtpa by FY32.
Iron ore self-sufficiency is seen rising to 50 per cent by FY31 from 33 per cent in FY26. Vijayanagar remains in the first quartile of WoodMac's global cost curve.
Fitch noted liquidity remains strong with INR413 billion cash at FYE26, plus undrawn lines. The Positive Outlook reflects potential for further leverage improvement. A sustained rise above 2.7x could lead to negative action.
JSW Steel had 31.9 mtpa primary capacity in India as of 1HFY26, rising to 35.7 mtpa on a consolidated basis, including its share of JJKSL.
Monday, the stock ended nearly 1 per cent higher at Rs 1,242.10 on the National Stock Exchange.
— ANI
Reader Comments
The Positive outlook and potential upgrade to BBB- is good for India's steel sector. But I'm skeptical about the safeguard duties—they protect domestic players but might increase costs for downstream industries. Need balanced policy.
JSW is doing well with the JV with JFE and POSCO. But I hope they focus on cost efficiency for consumers too. Steel prices are already high for small builders like me. The safeguard duties might just push prices up further.
Impressive deleveraging from 4.0x to 2.5x. The Vijayanagar plant being in top quartile of cost curve is a big advantage. But negative free cash flow is a concern—they need to balance expansion with profitability.
Good to see Fitch recognizing JSW's performance. But with capex so high, I hope they don't dilute shareholder value. The stock was up only 1% today—market seems cautious. Let's see if they can maintain EBITDA growth.
The JV with JFE is smart—6000 crore from asset sale plus technology access. But 50% iron ore self-sufficiency by FY31 is too slow. India imports a lot of ore; should aim higher. Still, positive for the economy overall.
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