Tata Steel received Baa3 long-term issuer rating from Moody’s Investors Service, which has modified the outlook from positive to stable. Additionally, Moody’s has removed the organisation’s Ba1 corporate family rating.
“The upgrade reflects our expectation of the continued strength in Tata Steel’s credit profile due to the company’s solid market position in India. We expect the company’s profitability to increase even as softer steel prices dent revenues,” said Kaustubh Chaubal, Vice President, Moody’s.
The upgrading also takes into account the company’s significant deleveraging through the decrease of gross debt, as well as our assumption that Tata Steel will continue to follow prudent financial practises with a well-balanced capital allocation and financial metrics suitable for its Baa3 rating, he added further.
TSI accounted for over 80% of the company’s consolidated EBITDA due to its backward integration into the mining of important raw materials iron ore and metallurgical coal, even though two-thirds of the company’s 28.8 million metric tonnes (mt) of global steel shipments in the fiscal year ending 31 March 2023 (fiscal 2023) were in India.
Recently, Tata Steel revealed plans to build a three metric ton per annum (mtpa) electric arc furnace (EAF) in the UK for USD 1.25 billion, plus a capital grant of £ 500 million from the UK government.