Moody’s Revised Tata Steel’s Outlook from Stable to Positive

SEATTLE (Scrap Monster): Ratings agency Moody’s Investors Service announced that it has revised the outlook on steel maker Tata Steel from ‘stable’ to ‘positive’. Furthermore, it affirmed the company’s Ba1 corporate family rating (CFR).

In a press release, Kaustubh Chaubal, Moody's Senior Vice President noted that the change in outlook reflects the company’s track record of delivering a solid operating performance while maintaining conservative financial policies. If Tata Steel is able to sustain the recent improvements in performance and credit metrics, there is a likelihood that upward rating pressure will build over the next one year, he noted.

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The press release highlighted the company’s well-laid-out capital allocation policy, which gives top priority to debt reduction over capital expenditure and new investments. The ratings agency expects the company to reduce its debt by at least $1 billion in fiscal 2023. It foresees significant reduction in the company’s overall credit risk, aided by structural improvement in capital structure, gross debt reduction and cash generated during the last two fiscal years.

Moody’s expects the business’ EBITDA per ton to decline to around $140-$150 in FY23 and further down to $40-$50 in FY24. The forecasts are based on the current price sensitivities for steel, Moody’s noted.