CARE Ratings reaffirms credit ratings of Jindal Stainless with 'stable' outlook

Jindal Stainless said that the credit rating agency CARE Ratings has reaffirmed the company's long-term rating at "CARE AA" with 'stable' outlook.

The agency has also affirmed the companys short-term rating at CARE A1+.

CARE Ratings stated that the reaffirmation of rating assigned to the bank facilities/instruments of Jindal Stainless (JSL) factors in the continuation of resilient operational and profitability performance of the company in different industry/economic cycles, as demonstrated by its consistently improving sales volumes and higher-than-envisaged profit before interest, lease rentals, depreciation, and taxation (PBILDT) per tonne from FY21-FY23.

The reaffirmation further factors sustained improvement in the companys financial risk profile with significant deleveraging activity undertaken by the company during the past few years, leading to persistent improvement in its debt coverage metrics.

JSL has recorded steady-state improvement in its sales volumes over the last three fiscals (refers to the period from April 01 to March 31). With the operationalization of the additional capacity at Jajpur, Odisha, JSL has further showcased improvement in sales volumes in 9MFY24 (refers to the period from April 01 to December 31) as well.

Going ahead as well, CARE Ratings expects sustenance in revenue and profitability over the medium-term period, driven by steady improvement in sales volumes and maintenance of PBILDT/tonne above Rs 20,000 per tonne on consolidated basis.

The rating continues to derive strength from the well-established position of JSL in the stainless steel (SS) manufacturing sector, being the largest SS producer in the domestic market, having a diversified product profile (various series & grades) and presence through various manufacturing facilities across key strategic geographies.

JSLs focus towards increasing its share of value-added products, along with its flexibility to shift between the domestic and exports markets, has enabled the company to withstand adverse industry cycles.

The above rating strengths are, however, tempered by susceptibility of the groups sales realisations and profit margins to volatility in raw material prices, foreign exchange fluctuations and the cyclicality inherent in the SS industry.

Jindal Stainless is a part of the Ratan Jindal Group and is the leading integrated stainless steel (SS) producers in the country with steel melting capacity of 3.00 MTPA, as on 30 June 2023. The company manufactures stainless steel slabs and hot-rolled/cold-rolled coils and sheets and is also engaged in the production of specialty SS, which are high value-added products, including precision strips and defence products.

The scrip shed 0.39% to currently trade at Rs 700.25 on the BSE.

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