CARE upgrades Jindal Stainless' credit facilities rating with stable outlook

Credit ratings agency CARE Ratings has upgraded the rating of the credit facilities of Jindal Stainless (JSL) to 'CARE BBB' from 'CARE BBB-' with a stable outlook.

"The revision in ratings assigned to the debt facilities and instruments of JSL factors in the steady growth in company's sales volumes and stable operating performance through the period FY18 to FY20, characterised by improving asset turnover and healthy per-tonne operating profits, which coupled with an improvement in gearing owing to reduction in debt levels, resulted in healthy cash accruals.

The revision in the ratings also takes into consideration the company's successful exit from corporate debt restructuring (CDR) effective March 2019 which is likely to provide it better operational and financial flexibility.

The ratings continue to derive strength from the extensive experience of the promoters and the management having a considerable track record in the stainless steel industry, the dominant position of the group in Indian stainless steel with an overall market share of nearly 50% and its diversified customer base with an emphasis on value-added products.

These rating strengths are, however, tempered by the leveraged, albeit improving, capital structure, susceptibility of its realisations and margins to volatility in raw material prices as well as cheap imports and foreign exchange rates and cyclicality inherent in stainless steel industry", the ratings agency said in a statement.

Managing director, JSl, Abhyuday Jindal said, "This improved rating is continued validation of JSL's performance. I am confident that the measures proposed by the government, to curb arbitrary and irrational imports that cause wanton injury to Indian manufacturing, will provide a much needed support to the stainless steel sector."

Jindal Stainless is one of the largest domestic stainless steel producers with steel melting capacity of 1.10 million tonne Per Annum (MTPA) as on 30 June 2020. The company manufactures stainless steel slabs and hot rolled/cold rolled coils and sheets.

The scrip tumbled 4.73% to Rs 47.30 on Friday.

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