Fitch: SC Ruling On Bhushan Power To Have Limited Credit Impact On JSW Steel

Fitch Ratings said on Tuesday that the Supreme Court’s decision to cancel JSW Steel’s acquisition of Bhushan Power and Steel and direct its liquidation is unlikely to materially affect JSW Steel’s credit profile. The rating agency noted JSW’s crude steel capacity remains the highest in India at 30 million tonnes per annum, even without Bhushan Power.

The May 2 ruling followed a petition by operational creditor Kalyani Transco and came nearly six years after the company’s debt resolution plan was cleared by the lenders and NCLT in 2019.

While the loss of Bhushan Power may weigh on JSW’s target of reaching 50 million tonnes of domestic capacity by 2030-2031, the potential refund of its ₹194 billion upfront payment to lenders could offset the expected 11% EBITDA contribution from Bhushan Power in 2025-26. Fitch added that this refund may improve JSW Steel’s EBITDA net leverage by 0.4–2.8 times in 2025-26.

Additional cash inflows could come from a ₹3.5 billion refund for payments made to operational creditors and compensation for prior investments that boosted Bhushan Power’s net worth by ₹52 billion from 2020-21 to 2023-24.

Fitch expects JSW Steel to bid for Bhushan Power during liquidation, as the court hasn’t barred it from doing so. It also expects JSW and the lenders to file a review petition in the Supreme Court within 30 days.