Previous ratings assigned to JSHL by CARE in January 2021 were CARE A- and CARE A2+, respectively.
“The rating upgrade comes on the back of robust operational and financial performance exhibited by JSHL in FY21. This includes JSHL’s long track record of successful operations, higher-than-envisaged sales realizations and margins, and its expertise in value-added products,” CARE ratings said in a report on Friday.
Commenting on this development, the company’s managing director Abhyuday Jindal said, “Despite initial and recurrent challenges posed by the pandemic, JSHL has adapted with agility and efficiency”.
The company is working on strengthening its Specialty Products Division (SPD) at Hisar which will further give the company a competitive edge in domestic and exports markets, Jindal said.
The CARE report said that the company managed to report higher realizations and saw a pick up in sales volumes.
“JSHL’s blended sales realizations significantly improved…on the back of an increase in stainless steel prices and a better product mix with higher contribution from 300 series, 400 series and specialized products division (SPD),” the report said.
The company’s focus on the sale of higher margin products and speciality steel led to improvement in operating profit margin.
The net profit margin of JSHL improved from 3.80% in FY20 to 5.63% in FY21 on account of reduced interest expense owing to the reduction in the total debt.
Going forward, CARE expects the company to maintain healthy profit before interest, taxes and depreciation per tonne aided by a strong demand, better product-mix and the company’s better ability to manage fluctuation in raw material pricing with increasing share of localized sourcing as against the imports.
“With higher capacity utilizations, better sales realization and consequent generation of healthy cash accruals, the company has been able to reduce its total debt (including acceptances) to Rs 2,487 crore as on March 31, 2021 (PY: Rs 2,885 crore),” the report said.
The company’s recent announcement to merge Jindal Stainless Hisar operations with
will create one of the largest stainless steel entities with a total capacity of 1.90 MTPA.
“Subsequent to the merger, the combined entity is expected to have more diversified operations, wider presence both domestically as well as globally, higher bargaining power with the suppliers and will become one of the top ten global stainless-steel manufacturers… (the) merger once completed is expected to result in an improvement in business and financial profile at group level supported by the industry-leading large scale of operations and better financial flexibility and liquidity position,” the report said.
