Jindal Stainless Gets a Rating Upgrade on Integration, Debt Profile

Leading stainless steel manufacturer Jindal Stainless Limited (JSL) has received a credit rating upgrade from CRISIL Ratings. The company’s long-term bank facilities and debt programme rating has been revised upwards from CRISIL AA-/Positive to CRISIL AA/Stable. Meanwhile, the short-term bank facilities rating has been reaffirmed at CRISIL A1+.

This rating action factors in Jindal Stainless’ improved business risk profile, driven by its forward integration through capacity expansions and acquisitions. It also takes into account the company’s effective working capital management and robust demand outlook.

Founded in 1970, Jindal Stainless is India’s largest stainless steel producer with an annual turnover of INR 35,700 crore in FY23. The company has two manufacturing facilities in Odisha and Haryana, with a combined annual melt capacity of 3 million tonnes to be achieved in FY24. JSL is also expanding globally with a worldwide network spanning 15 countries and service centres in India and Spain.

Jindal Stainless holds a prominent position as the market leader in the domestic stainless steel industry. Its integrated operations have conferred cost competitiveness and operational efficiency advantages, making JSL one of the top five stainless steel players globally outside China.

The company serves a diverse range of industries with its wide stainless steel product portfolio including slabs, blooms, coils, plates, sheets, strips, blade steel and coin blanks. JSL has continually innovated high-quality stainless steel grades and pioneered application development in India.

According to CRISIL’s rating rationale, Jindal Stainless has streamlined its operations over the years. Its business risk profile has improved significantly backed by deleveraged balance sheet and strong customer relationships. JSL has achieved effective raw material integration, securing long-term nickel and chrome contracts.

The successful merger of Jindal Stainless (Hisar) Limited with JSL has resulted in synergies and savings. The acquisition of Jindal United Steel Limited (JUSL) has allowed JSL to venture into the pipes and tubes segment.

More recently, JSL acquired 49% stake in a nickel pig iron smelter facility in Indonesia. This investment in the raw material source will reduce nickel dependency on imports and enable greater cost efficiencies.

JSL has maintained financial discipline through the capital expenditure cycles. Despite expanding capacity organically and inorganically, the company has kept leverage ratios aligned with the industry’s top range. Prudent capital allocation and working capital management have led to credit profile improvement.

Attractive Indian stainless steel sector dynamics also support a positive outlook for Jindal Stainless. Rising incomes are driving consumption across sectors like process industries, clean energy, railways, metro rail and household goods. While per capita consumption is lower than global averages, stainless steel usage is bound to increase in India.

JSL is also increasing its share of value-added products, which provide better margins. Its extensive distribution network and strong brand equity give the company a competitive edge to tap growing stainless steel demand.

On the ESG front, Jindal Stainless aims to achieve carbon neutrality by 2050 in line with India’s net zero pledge. The company manufactures stainless steel through an electric arc furnace route that emits far lower greenhouse gases compared to blast oxygen furnace. JSL is committed to renewable energy usage, waste management and energy optimization to reduce its carbon footprint.