India Ratings Upgrades JSW Steel & NCDs to IND AA+/Stable

India Ratings & Research (Ind-Ra) has upgraded JSW Steel Limited and its Non-Convertible Debentures (NCDs) to IND AA+ with a Stable Outlook, resolving the Rating Watch with Positive Implications. The upgrade follows a substantial cash inflow of approximately ₹37,400 million (INR374 billion) from the strategic slump-sale transfer of Bhushan Power & Steel Limited's (BPSL) steel business to a joint venture with JFE Steel Corporation. This inflow was primarily used to reduce debt, strengthening the company's financial risk profile.

The consolidated net adjusted leverage improved to 1.93x in 1QFY27 from 2.65x in FY26 and 4.45x in FY25. Ind-Ra expects this deleveraging to help JSW Steel maintain net leverage below 2.5x over the medium term, despite planned capex of around ₹13,050 million (INR1,305 billion) over the next four to five years.

The rating is further supported by improving operating performance, with steel volumes growing 12% year-on-year in FY26 and consolidated EBITDA per tonne rising 49% to ₹15,013 in 1QFY27. This improvement is driven by a sustained higher share of value-added and special products (VASP) in sales. The company's strong business profile, leading market position, global presence, and operational efficiencies also underpin the rating. Backward integration for raw material security, with one-third captive iron ore integration as of June 30, 2026, is a key strength. However, the inherent cyclicality of the steel industry and volatile steel prices remain constraints.

JSW Steel received ₹37,400 million (INR374 billion) cash inflow from the BPSL transaction, reducing net debt to ₹72,200 million (INR722 billion) as of June 30, 2026. The company plans significant capex of approximately ₹13,050 million (INR1,305 billion) over the next four to five years, with ₹2,200-2,400 million (INR220-240 billion) expected in FY27, largely funded through internal accruals.

Ind-Ra expects JSW Steel's consolidated EBITDA per tonne to range between ₹12,000-13,000 in FY27, supported by operating leverage, capacity ramp-ups, and favourable product mix. Domestic hot rolled coil (HRC) prices are expected to remain elevated due to healthy domestic demand and safeguard duties. The company's cost-efficiency programs and continued investment in downstream projects are expected to support profitability.

JSW Steel's sales volume increased to 29.63 million tonnes in FY26, and is expected to remain stable in FY27. The company benefits from a significant cost advantage due to its location, low manpower costs, operational efficiencies, and backward integration in iron ore and coking coal. Its strategic partnership with JFE for technology also aids in developing value-added products.