JSW Steel , India's largest steel producer, has received a significant boost as Moody's Ratings revised its outlook from stable to positive while affirming its Ba1 ratings. This upgrade reflects the company's impressive capacity expansion and strong growth strategy in a burgeoning Indian steel market.

Capacity Expansion Drives Positive Outlook

JSW Steel has demonstrated remarkable growth, increasing its production capacity by approximately 20% in just 15 months to reach 35.7 million tonnes per annum (mtpa). The company's ambitious plans include a further 20% capacity increase by 2028, solidifying its position as a dominant player in the Indian steel industry.

Financial Projections and Market Outlook

Moody's projects JSW Steel's earnings to reach ₹300.00 crore in FY26 and ₹350.00 crore in FY27, up from ₹223.00 crore in FY25. This growth is expected to be driven by:

• Increased sales volumes, projected to reach 28.5 million tonnes in FY26 and nearly 32 million tonnes in FY27
• Stable EBITDA per tonne of ₹10,500-10,750, in line with the company's 10-year average
• Strong demand in the Indian steel market, anticipated to grow at 5-7% annually until 2030

Strategic Expansion and Operational Improvements

JSW Steel's positive outlook is underpinned by several key factors:

1. Capacity Ramp-up: The company is focusing on expanding facilities at Vijayanagar, Salem, Dolvi, and Bhushan Power and Steel Limited (BPSL).
2. Market Position: As India's largest steel producer, JSW Steel is well-positioned to capitalize on the country's growing infrastructure and construction sectors.
3. Financial Discipline: Moody's expects JSW Steel to maintain financial prudence while implementing its growth plans and managing debt refinancing.

Challenges and Considerations

Despite the positive outlook, JSW Steel faces some challenges:

• Elevated competition from imports, which affected profit margins in FY25
• Significant capital expenditure plans of ₹200.00 crore in FY26 and ₹210.00 crore in FY27
• Potential impact of Supreme Court rulings on state mining taxes, which remains unclear

Liquidity and Debt Management

While Moody's notes that JSW Steel's liquidity will be weak over the next 12 months, the company is expected to maintain strong access to domestic and international financial markets. The rating agency anticipates that JSW Steel's leverage, measured by debt/EBITDA, will decline to 3.0x-3.5x in the next 12-18 months.

Conclusion

The positive outlook from Moody's underscores JSW Steel's strong market position and growth potential in India's expanding steel industry. As the company continues to execute its expansion plans and maintain financial discipline, it is well-positioned to benefit from the country's robust steel demand, driven by infrastructure development and industrial growth.

The Supreme Court has overturned its own judgment and upheld JSW Steel 's ₹19,700-crore resolution plan for Bhushan Power and Steel Ltd (BPSL). This decision marks a significant legal victory for JSW Steel, reinforcing its position in the steel industry.

Key Highlights

• The Supreme Court rejected the committee of creditors' plea seeking an additional ₹6,100 crore.
• The court stated that such claims have no basis under the Insolvency and Bankruptcy Code.
• BPSL was part of the Reserve Bank of India's original 'dirty dozen' referred for insolvency.
• The Supreme Court had initially scrapped JSW's plan citing delays and procedural violations.
• The court reversed its decision after review petitions.

Acquisition Details

JSW Steel acquired a 49% stake in BPSL through the insolvency process in 2021. The company later increased its stake to 83% by October 2021, gaining 2.75 MTPA steel-making capacity in Odisha.

Court's Observations

The Supreme Court noted that JSW Steel had invested significantly in BPSL and turned it into a profitable entity. This observation likely played a crucial role in the court's decision to uphold the resolution plan.

Market Response

Following the announcement, JSW Steel shares gained 1.50%, trading 1.10% higher at ₹1,160.50.

Implications

This ruling brings clarity to the acquisition process and sets a precedent for similar cases in the future. It underscores the finality of resolution plans approved under India's insolvency and bankruptcy framework, providing greater certainty for investors in distressed assets.

Conclusion

As the legal battle concludes, the focus now shifts to how JSW Steel will leverage this acquisition to strengthen its position in the competitive steel market. The company now has a clear path to fully integrate BPSL's assets and operations into its existing portfolio, potentially leading to increased production capacity and market share.