Moodys to review JSW Steel rating for downgrade

The international rating agency, Moody’s Investor Services said that it has placed JSW Steel Limited’s rating under review for downgrade on the back of the company’s severe exposure to the ongoing Coronavirus outbreak and its subsequent fall in steel demand. The rating agency said it expects to conclude the review within 90 days.

Moody’s Vice-President and senior credit officer, Kaustubh Chaubal stated that the review reflects the agencies concern that JSW will face significant challenges due to Coronavirus-led economic downturn, with declining sales, weak earnings and free cash flow generation because of tepid demand from automakers, manufacturing and other steel-consuming industries.

The rapid and widening spread of Coronavirus outbreak, deteriorating global economic outlook, falling oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The steel industry has been one of the most significantly affected sectors, given its sensitivity to consumer demand and sentiment.

The rating agency added that given the current market condition, an upgrade of Sajjan Jindal-led firm’s rating is unlikely in the near-term. However, the outlook could return to stable if improved market conditions lead to a recovery in metrics to pre-outbreak levels.

JSW Steel Limited is primarily engaged in the business of manufacture and sale of iron & steel products. It is an integrated steelmaker and a producer of hot rolled coils in India. 

On Wednesday, the stock closed at Rs 172.10, up by 2.62 per cent or Rs 4.40 per share. The 52-week high is recorded at Rs 313.40 and the 52-week low is Rs 132.50 on BSE.