Is JSW Steel eyeing a USD 750 million borrowing for expansion?

Steel magnate Sajjan Jindal is set to embark on a major expansion drive for JSW Steel Ltd, India’s largest mill, aiming to bolster its capacity and meet soaring demand. The company plans to borrow $750 million for capital expenditure, signalling its intent to nearly double steel output to 50 million tons by the end of the decade.

Seeking Growth Opportunities

JSW Steel’s thirst for growth is evident as it ventures into new projects. Recently, the Mumbai-based firm initiated work on a $7.8 billion complex in eastern India, highlighting its commitment to scale up operations. Additionally, the company is eyeing a 20% stake in Whitehaven Coal Ltd.’s Blackwater coal mine, showcasing its strategic approach to diversifying its portfolio.

Raising Capital

According to Bloomberg, to fund these ambitious projects, JSW Steel is reaching out to lenders, with a mandate for the $750 million loan expected to be finalized soon. The specifics of the loan, including its tenor and pricing, will be determined as the deal progresses. This move underscores the company’s proactive approach to securing the necessary funds for its growth trajectory.

Financial Strategy

In line with its expansion plans, JSW Steel’s board approved raising 20 billion rupees ($241 million) in funds through bonds in January. Despite a significant quintupling of its December-quarter profit from a year earlier, analysts have expressed concerns about the company’s rising debt. Net debt rose nearly 14% to 792.21 billion rupees at the end of December, although net debt to EBITDA fell to 2.64 times from 3.51, indicating a relative improvement in its debt profile.

Stock Performance

The stock has seen an almost tenfold increase in value over the last decade!

JSW Steel is part of the illustrious O.P. Jindal family, with matriarch Savitri Jindal being Asia’s wealthiest woman. While her wealth is derived from the businesses of her four sons, a substantial portion comes from JSW Group companies. This legacy adds a layer of significance to JSW Steel’s growth story, highlighting its role in the family’s continued success.

Conclusion

JSW Steel’s ambitious expansion plans under Sajjan Jindal’s leadership underscore its commitment to growth and innovation. By seeking capital for expansion and diversifying its portfolio, the company is positioning itself for long-term success in the competitive steel industry. As it navigates the complexities of the market, JSW Steel remains a key player to watch, shaping the future of India’s steel sector.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.