JSW Steel Turns Up the Heat: Fitch Ratings Signals Upgrade Potential with JFE Mega Deal |

Updated: January 06, 2026 21:07

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Fitch Ratings placed JSW Steel’s ‘BB’ rating on Rating Watch Positive after approval of a 50:50 joint venture with Japan’s JFE Steel to acquire Bhushan Power and Steel assets. The deal, expected to yield ₹32,400 crore, will significantly reduce JSW’s leverage, strengthen margins, and enhance its financial flexibility by FY26–FY28.

Fitch Ratings has placed JSW Steel Ltd’s ‘BB’ Long-Term Issuer Default Rating on Rating Watch Positive (RWP), following the Indian steel major’s move to form a 50:50 joint venture with Japan’s JFE Steel Corporation. The deal could release over ₹32,400 crore in cash and strengthen JSW Steel’s balance sheet over FY26–FY28.

JSW Steel’s planned joint venture with JFE to acquire Bhushan Power and Steel assets is expected to meaningfully reduce leverage, boost margins, and enhance financial flexibility. Fitch expects to resolve the RWP once the JV is finalized, likely by FY26-end.

Key Developments And Outlook

The Fitch upgrade watch follows JSW Steel’s board approving a new joint venture with JFE Steel Corporation, wherein the JV will buy Bhushan Power and Steel Ltd assets for ₹24,483 crore, funded partly through debt and JFE’s equity injection.
JSW Steel expects to receive ₹32,400 crore in cash from the transaction within the next six months, helping reduce its EBITDA net leverage from 4.0x in FY25 to around 2.1x by FY27.
Fitch estimates the JV will lower JSW’s consolidated leverage by 0.5x–0.7x between FY26–FY28, while improving profitability and expanding access to higher-value steel markets.
EBITDA margins are forecast to rise to ₹9,500 per tonne in FY26 and ₹10,750 per tonne in FY27, aided by robust domestic demand, cost efficiencies, and government import curbs.
JSW projects annual capex of ₹20,000–₹21,000 crore over FY26–FY28, focusing on capacity expansions and mining investments, with scope to scale back if weaker cycles emerge.
Liquidity remains solid with ₹18,700 crore in cash and strong access to financing lines. Fitch noted JSW’s substantial short-term debt is well supported by its cash flows and market access.
Fitch’s final rating action will depend on successful JV execution and sustained leverage below 2.7x.

Sources: Fitch Ratings, Company Announcements

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