Brickwork upgrades ratings for Tata Steel's Rs 4,000 crore NCDs

Mumbai (Maharashtra) [India], Aug 24 : Brickwork Ratings has upgraded the rating of unsecured non-convertible debenture (NCD) issues aggregating Rs 4,000 crore of Tata Steel Ltd (TSL) from AA stable to AA-plus stable.
It said the upgrade follows substantial improvement in debt protection metrics of TSL on consolidated basis with reduction of consolidated gross debt by Rs 32,901 crore during past three quarters.
Besides, there has been reduction of debt under European operations during Q1 FY22 on the back of strong cash flow generation sequentially since 2Q FY21 onwards with improved operating performance globally.
The company plans to reduce gross consolidated debt by minimum one billion dollars annually targeting sustained long term net debt to EBITDA of 2.0x.
Brickwork said the rating continues to derive strength from the professional management, group support and diversified product portfolio with backward-integrated operations in India in the form of captive iron ore and coal mines, making it one of the lowest-cost producers of steel and the market leader in EBITDA per tonne.
The rating is, however, constrained by the inherent risk associated with the steel industry with volatility in raw material and finished goods prices.
The stable outlook indicates sustainability of current level of operations in near future with stable demand outlook and management guidance of reduction of gross debt going forward.