India Ratings has assigned a long-term ‘Ind BBB’ rating with a stable outlook to Jindal Stainless (JSL), giving an impetus to the company’s effort to come out of the corporate debt restructuring.
In June, Care Ratings upgraded JSL credit rating from ‘Care BB+ to Care BBB-‘.
The company entered CDR in 2010, after a tough economic cycle hampered its ability to service debt of ₹8,000 crore.
As part of the restructuring plan, the company distributed its debt among three more firms — Jindal Stainless (Hisar), which is listed and two private companies, Jindal United Steel and Jindal Coke.
The move helped in leveraging idle capacity and bringing down the interest cost. At present, JSL has a debt of ₹4,000-5,000 crore.
While Jindal Stainless (Hisar) is a wholly-owned subsidiary of JSL, the other two companies have got equity from companies-owned by PR Jindal, Sajjan Jindal and Naveen Jindal, brothers of Ratan Jindal, Chairman and Managing Director of JSL. Their mother Savitri Jindal also has equity stake in Jindal United Steel.
The revised rating push demonstrates improvement in creditworthiness of JSL and is a reflection of higher operating performance, improved EBIDTA, and significant debt reduction achieved through implementation of an efficient Asset Monetisation Plan, said India Ratings in a statement on Wednesday.
Abhyuday Jindal, Managing Director, JSL, said the rating boost showcases the market sentiment and global acceptance of JSL products.
“JSL is serving the developed economies of Europe and the US apart from the domestic market and caters to critical applications in the nuclear industry, cryogenic applications, and white goods segment by providing all grades of stainless steel,” he said.
JSL net leverage improved to 3.7 times in FY18 from 30 times in FY15, with interest coverage enhancing to 2.4 times from 0.4 times. India Ratings expects JSL’s credit metrics to improve further in view of healthy EBITDA per tonne over FY19-FY20, progressive debt repayments and low-to-moderate capex requirements in the medium term.