Debt reduction, JV benefits with JFE seen as positives for JSW Steel

JSW Steel's BPSL restructuring and its 50:50 JFE JV signal major deleveraging and a cleaner structure, adding tech benefits even as consolidated operating profit is expected to moderate

JSW Steel Ltd (JSTL) has announced a restructuring that unlocks value from Bhushan Power & Steel Ltd (BPSL) and changes the balance-sheet. JSTL will do a slump sale of 50 per cent stake in BPSL to Japan’s JFE Steel in two equal tranches, totalling ₹15,700 crore in cash. This implies an enterprise value of ₹53,000 crore.

 

The enterprise value comprises ₹31,500 crore of equity value and another ₹21,500 crore of debt transfer, the latter including BPSL’s existing borrowings of ₹5,000 crore, and ₹16,500 crore of additional debt, which is to be raised at JSW Sambalpur (the entity that acquired BPSL