Tata Steel dips after S&P downgrade

The stock dipped 6% to Rs 232 after S&P downgraded the long-term corporate credit rating of Tata Steel by a notch.

Tata Steel has dipped 6% to Rs 232 on the BSE after the company said the rating agency Standard & Poor's downgraded the long-term corporate credit rating by a notch to 'BB-' from 'BB', citing weak financial performance and high debt leverage.

“The sharp fall in international steel prices due to excessive exports from China and other has triggered a review of Tata Steel’s credit rating by Standard and Poor. The corporate credit rating has been downgraded by 1 notch,” Tata Steel said in a regulatory filing.

S&P expect Tata Steel’s cash flows to remain under pressure over the next 12-24 months because of lower steel prices, competitively priced imports, and compressed profitability.

The stable outlook reflects our expectations that Tata Steel’s operating performance will likely recover over the next 12-15 months as profitability at the India operations gradually improves and the performance of the European remains stable, S&P said in a overview.

At 09:17 a.m. the stock was down 5% at Rs 235 on the BSE. A combined 314,866 shares changed hands on the BSE and NSE.