Fitch Places JSW Steel’s ‘BB’ Rating on Rating Watch Positive After JV with JFE

New Delhi, 07 January 2026: Fitch Ratings has placed JSW Steel Limited (JSWSL)’s Long-Term Issuer Default Rating (IDR) of ‘BB’ on Rating Watch Positive (RWP). The rating action also applies to JSWSL’s senior unsecured bonds and those of its subsidiary, Periama Holdings, LLC.

The move follows JSWSL’s board approval to form a 50:50 joint venture with Japan-based JFE Steel Corporation, which will acquire steel assets owned by Bhushan Power and Steel Limited (BPSL), a JSWS subsidiary. The transaction could result in JSWS receiving INR 324 billion in cash over the next six months, significantly improving its EBITDA net leverage and strengthening its financial profile through FY26–FY28.

Key Highlights of Fitch’s Rating Action:

Proposed JV: The JV, to be named JSW Kalinga Steel Limited (JKSL), will purchase BPSL’s steel assets for INR 244.83 billion. The cash proceeds will support deleveraging and growth investments.
Execution Risks: Modest execution risks exist, primarily due to regulatory approvals including from the Competition Commission of India (CCI), mitigated by JSWS and JFE’s long-standing relationship.
EBITDA and Margins: JSWS’s standalone EBITDA per tonne is forecast to increase from INR 8,400/t in FY25 to INR 9,500/t in FY26 and INR 10,750/t in FY27, supported by operating leverage, volume growth, and positive industry conditions.
Leverage Improvement: Proportionate consolidation of JKSL is expected to reduce EBITDA net leverage from 4.0x in FY25 to 2.6x in FY26 and 2.1x in FY27.
Volume Growth: JSWS anticipates 6–10% annual volume growth over FY27–FY28 due to capacity expansion and debottlenecking at key plants.
Capex and Flexibility: Annual capex is projected at INR 200–210 billion, including investments in JVs and overseas operations, with room for discretionary adjustments if required.

Fitch highlighted JSWS’s cost-efficient operations in India, robust liquidity with INR 187 billion cash on hand, and limited raw-material integration benefits. The rating also factors in JSWS’s competitive position versus global peers U.S. Steel and Usiminas, highlighting JSWS’s superior scale and efficiency despite higher leverage.

Fitch will resolve the Rating Watch Positive once the JV is fully executed and regulatory approvals are completed, expected by end-FY26.