JSW Steel shares trade 1% higher as Moody's upgrades outlook to positive; top reasons why

Periama Holdings, LLC is a wholly-owned indirect subsidiary of JSW Steel.

At the same time, Moody's said it has affirmed: JSW Steel's Ba1 corporate family rating (CFR) and Ba1 senior unsecured ratings; the Ba1 rating on Periama Holdings' backed senior unsecured notes; and the Ba1 rating on the guaranteed senior unsecured revenue bonds issued by Jefferson County Port Authority. The Ba1-rated notes at Periama Holdings and Jefferson County Port Authority are guaranteed by JSW Steel.

"The outlook change to positive reflects JSW Steel's meaningful expansion in operating scale, reinforcing its position as India's largest steel producer. The ramp-up of operations at recently completed projects will drive higher earnings and support sustained improvement in the company's credit metrics," says Hui Ting Sim, a Moody's Ratings Assistant Vice President and Analyst.

"The rating action also reflects our expectation that JSW Steel will implement its growth plans with financial discipline, and it will proactively manage the refinancing of significant debt obligations," Sim added.

Reacting to the development, shares of JSW Steel were trading over 1% higher at ₹1,159.30 apiece on the NSE.

What Moody's says

Moody's, in its statement dated October 1, said that JSW Steel's production capacity grew by around 20% over the past fifteen months to reach 35.7 million tonnes per annum (mtpa), with plans for a further increase of about 20% by 2028. In its fiscal year ended March 2025 (fiscal 2024-25), the company commissioned 6 mtpa of crude steel capacity in India. It also intends to add 2.2 mtpa at Vijayanagar and Salem through debottlenecking projects in the next 12 months and an additional 5 mtpa at Dolvi, as well as 0.5 mtpa at Bhushan Power and Steel Limited (BPSL) by fiscal 2027-28.

The substantial increase in JSW Steel's production capacity supports its ability to meet India's growing steel demand. India is the world's second-largest steel market, with steel consumption rising over 10% annually for the past four years.

"We anticipate that steel demand in India will grow at a 5%-7% compound annual growth rate until 2030, fuelled by infrastructure spending, construction projects, and expansion in industrial production to meet the needs of a rising population," Moody's said.

Moody's added that higher sales volumes and profit margins will boost JSW Steel's earnings to about $300 billion in fiscal 2025-26 and $350 billion in fiscal 2026-27, from $223 billion in fiscal 2024-25. Following the commissioning of brownfield facilities over the last twelve months, Moody's estimates the company's steel sales will climb to 28.5 million tonnes (mt) and close to 32 mt in fiscal 2025-26 and fiscal 2026-27, respectively, from 26.5 mt in fiscal 2024-25.

Factors that can boost JSW Steel's margins

Lower raw material costs, reduced import competition in India and the US, and cost efficiencies will support margin improvement for JSW Steel over the next two years. India's 12% safeguard duty on certain steel imports, effective for 200 days from April, reflects the government's intent to shield the domestic steel industry from dumping practices, Moody's said.

“We expect that further protective measures will be taken if competitive pressures from steel imports persist or escalate. In the June quarter of fiscal 2025-26, JSW Steel reported an increase in its EBITDA per tonne to about $11,500," it added.