India Ratings has affirmed JSW Steel’s ‘IND AA’ long-term issuer rating and ratings on non-convertible debentures, while revising the outlook from ‘Rating Watch with Developing Implications’ to ‘Stable’. The revision reflects expectations of improved consolidated net adjusted leverage supported by healthy domestic demand and increased production from commissioned capacities. The affirmation reflects JSWL’s strong business profile and cost advantages.
Rating Affirmation and Outlook Revision
India Ratings has affirmed JSW Steel Limited’s (JSWL) long-term issuer rating and its non-convertible debentures (NCD) at ‘IND AA’, resolving the previous Rating Watch with Developing Implications. The outlook has been revised to Stable, effective November 12, 2025. This change indicates a more stable financial outlook for the company.
Key Drivers for the Rating
The affirmation reflects the expectation of an improvement in JSWL’s consolidated net adjusted leverage from FY26 onwards. This improvement is expected to be driven by healthy domestic demand and increased volume from the newly commissioned capacities at Vijayanagar and Bhushan Power and Steel Ltd (BPSL). The company’s EBITDA per tonne is also likely to benefit from backward integration for iron ore and coking coal, reducing power costs, and a higher share of value-added products.
Financial Performance and Expectations
The net leverage increased to 4.4x in FY25 due to pricing pressure from low-cost Chinese exports but improved to 3.6x (annualized) in 1HFY26. It is expected to remain below 3.5x from FY26 onward, supported by increased sales volume and EBITDA per tonne. Despite ongoing capital expenditure, the visibility of net leverage improving to around 3.5x over FY26-FY28 is a key factor.
Capacity Expansion and Capex
JSWL plans to increase its total capacity in India to 42mtpa by September 2027 and further to 50mtpa by FY31. A capex of approximately INR761.1 billion is planned over FY26-FY29, which includes expansions in Vijayanagar and BPSL. The company is funding this capex through a mix of debt and internal accruals.
Raw Material Security and Backward Integration
JSWL has secured 24 iron ore mines, with 12 operational, meeting approximately 37% of its total iron ore requirement. The company is also working to increase its captive iron ore production and commission three coking coal mines in India over the next two to three years, potentially generating 2mtpa of clean coking coal.
Risks and Monitorables
Key monitorables include any significant moderation in commodity prices leading to lower EBITDA per tonne, an increase in consolidated balance sheet net debt, and inherent industry and regulatory risks, including exposure to forex risks.
Source: BSE
