Crisil Ratings has upgraded Jindal Stainless (JSL) long term banking facilities to AA- / Stable. The previous rating was Crisil A + / Stable. The rating of JSL’s short-term bank facilities was reaffirmed to Crisil A1 +.
Crisil Ratings also upgraded its rating on the long-term banking facilities of Jindal Stainless (Hisar) (JSHL) to âCRISIL AA- / Stableâ from âCrisil A + / Stableâ, and also assigned its rating âCrisil A1 +â on the short-term bank facilities of JSHL.
âAccording to Crisil, this upgrade underlines a significant improvement in JSL’s business risk profile, with Jindal Stainless (Hisar) Limited (JSHL), and a lasting improvement in the operational efficiency of the business through better earnings through ton before interest, taxes, depreciation and amortization (EBITDA) levels, âsaid a statement from JSL.
âThis upgrade recognizes the improved financial risk profile of JSL, thanks to strong liquidity, a deleveraged balance sheet and minimal long-term debt to the medium term. This takes into account the market leading position of the Jindal Stainless Group (JSL and JSHL) in the domestic stainless steel industry in terms of manufacturing capacity, sales volume and significant export presence â , adds the press release.
Commenting on this development, JSL Managing Director Abhyuday Jindal said, âThe company has performed well despite its sensitivity to the volatility of input costs and the cyclicality of the stainless steel industry, while competing against dumped Indonesian and Chinese imports. JSL is undertaking capital expenditures for brownfield expansion that will further enhance its national and global footprints. “
The Crisil report highlighting the reasons for the rating revaluation highlighted the improvement in the financial risk profile, supported by the debt reduction, of JSL.
âAided by healthy operational performance, JSL was able to significantly reduce the consolidated external debt to Rs 1,971 crore as of September 30, 2021, from Rs 3,488 crore as of March 31, 2019. JSHL also reduced its consolidated debt to Rs 1,527 crore from Rs 2,367 crore, over the same period. Crisil Ratings understands that the group has reduced its debt so that most of the term debt expected over the next two fiscal years has already been paid and that it only has around Rs 245 crore in scheduled payments until. at the end of fiscal 2023. This provides the group with sufficient cushion to absorb ongoing capital spending and underpins management’s strong focus on debt reduction, âthe Crisil report said.
âAs a result, the interest coverage ratio improved to 4.4 times in fiscal 2021, compared to 2.6 times in fiscal 2019, at the group level. The same has further improved about 13 times in the first half of fiscal 2022, âthe report adds.