Moody's upgrades outlook on JSW Steel to stable

Moody's Investors Service has upgraded outlook to stable from negative on Sajjan Jindal-led JSW Steel citing sustained improvement in operating and financial performance.
"The change in outlook to stable from negative reflects the sustained improvement in JSW's operating and financial performance over the last four quarters, and our view that completion of the company's capex cycle will result in free cash flows turning positive and applied towards debt reduction," Kaustubh Chaubal, Moody's Vice President and Senior Analyst said.
It also affirmed the company's corporate family rating (CFR) and senior unsecured rating at Ba3.
Steel prices in India have recovered from the lows observed during 2015-2016, following various measures by the government to curb imports, and the positive momentum across global steel markets since April 2016.

"This situation has led to a marked improvement in JSW's operating performance so far in FY2017," it said.
In particular, average monthly steel imports into India of approximately 0.67 million tonnes in April to December period of FY'17 of were down by nearly 37 per cent from the more than one million tonnes seen in FY'2016.
Furthermore, an addition to crude steel capacity by 25 per cent, increasing proportion of high-margin value-added products, and continuing cost rationalisation initiatives supported the improvement in JSW's profitability, despite sporadic raw material cost pressures.
"Looking ahead, we do not expect the recent rise in iron ore and coking coal prices to be passed on entirely," the statement said.