JSW Steel's Long-Term Ratings Placed on Watch with Positive Implications by ICRA
ICRA Limited has placed JSW Steel's long-term ratings on watch with positive implications following approval of a strategic 50:50 joint venture with JFE Steel Corporation valued at ₹31,500 crores. The transaction involves JFE's equity infusion of ₹15,750 crores and transfer of BPSL's steel business for ₹24,483 crores, expected to result in aggregate deleveraging of ₹37,000 crores and improvement in net debt/OPBDITA ratio to 2.10-2.20 times by FY2027-28.
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JSW Steel Limited has received a rating watch with positive implications from ICRA Limited on its long-term bank facilities and non-convertible debentures, following the announcement of a strategic partnership with Japan-based JFE Steel Corporation. The rating action was communicated to stock exchanges on December 12, 2025, in compliance with SEBI listing regulations.
Strategic Joint Venture Details
The company's board of directors approved a strategic 50:50 joint venture with JFE Steel Corporation on December 03, 2025. The transaction structure involves several key components that will reshape JSW Steel's operational landscape.
| Parameter: | Details |
|---|---|
| Total Equity Valuation: | ₹31,500.00 crores |
| JFE Equity Infusion: | ₹15,750.00 crores (two tranches of ₹7,875.00 crores each) |
| BPSL Cash Consideration: | ₹24,483.00 crores |
| Total Cash Inflows to JSL: | ₹32,358.00 crores |
| BPSL Steel Capacity: | 4.50 mtpa |
The steel business undertaking of Bhushan Power and Steel Limited will be transferred to the joint venture through a slump sale. The JV will be housed under JSW Kalinga Steel Limited, with JSW Sambalpur Steel Limited as its wholly owned subsidiary.
Rating Action and Financial Impact
ICRA's rating watch reflects the expected improvement in JSW Steel's financial risk profile following the transaction completion. The rating agency has placed long-term ratings on watch while maintaining short-term ratings.
| Rating Type: | Previous Rating | Current Status |
|---|---|---|
| Long-Term Bank Facilities: | [ICRA]AA (Stable) | [ICRA]AA Rating Watch with Positive Implications |
| Non-Convertible Debentures: | [ICRA]AA (Stable) | [ICRA]AA Rating Watch with Positive Implications |
| Short-term Bank Facilities: | [ICRA]A1 | [ICRA]A1 (Outstanding) |
| Commercial Papers: | [ICRA]A1 | [ICRA]A1 (Outstanding) |
The transaction is expected to result in significant deleveraging of JSW Steel's balance sheet. ICRA anticipates aggregate deleveraging of ₹37,000.00 crores at the consolidated level, combining cash proceeds and deconsolidation of BPSL's net debt of around ₹5,000.00 crores.
Credit Profile Enhancement
The strategic partnership with JFE Steel Corporation brings a long-term partner with substantial expertise in steel manufacturing. JFE Steel Corporation is a leading integrated steel producer based in Japan, with consolidated crude steel production of 23.20 million tonnes in the fiscal year ended March 2025.
ICRA expects the net debt/OPBDITA ratio to improve to around 2.10-2.20 times over FY2027 and FY2028, compared to an elevated level of 3.40 times as of March 31, 2025. This improvement reflects the substantial deleveraging impact of the transaction.
Facility Coverage and Outstanding Amounts
The rating action covers various debt instruments totaling ₹94,660.00 crores across different categories.
| Instrument Category: | Outstanding Amount (₹ crores) | Rating Status |
|---|---|---|
| Long-Term Fund Based: | 24,614.18 | Rating Watch with Positive Implications |
| Short-term Fund Based: | 5,047.66 | Outstanding |
| Short-term Non-fund Based: | 36,611.00 | Outstanding |
| Non-convertible Debentures: | 7,875.00 | Rating Watch with Positive Implications |
| Commercial Paper Programme: | 5,000.00 | Outstanding |
ICRA will continue monitoring the progress regarding receipt of requisite approvals and successful completion of the transaction. The rating watch will be resolved upon completion of the transaction, with potential for positive rating action based on the improved financial metrics and strategic benefits from the partnership.
Historical Stock Returns for JSW Steel
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +1.82% | -3.16% | -4.76% | +13.04% | +11.90% | +214.83% |
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