Motilal Oswal Financial Services

18 July 2020

Annual Report Update | Sector: Metals

JSW Steel

Buy

BSE SENSEX

37,020

S&P CNX

10,902

CMP: INR207

TP: INR242 (+17%)

Focused on navigating choppy waters



Higher exports and cash conservation to help tide over weak demand

JSW Steel (JSTL)’s FY20 Annual Report highlights the company’s strategy to combat

the fallout of COVID-19. JSTL plans to ramp-up exports to 30% of sales (v/s 21% in

FY20 and 16% in FY19) to compensate for weak demand in the domestic market.

Even in FY20, domestic volumes fell 10.7% YoY, which was partly compensated

through higher exports, with overall sales volumes declining 4% YoY.

JSTL is planning targeted cost savings, supported by technology and digitalization, to

reduce the cost base across areas of operation. Employee costs have already been

cut, with FY21 likely to see flat manpower costs despite the new capacity at Dolvi.

Capex has also been curtailed, with FY21 planned at INR90b v/s INR102b in FY20.

Planned capex of INR487b over FY18–22 is, however, only halfway through and likely

to spill over to FY23 and beyond. This is attributed to the company’s current focus

being on conserving cash.

Leverage has risen further in FY20 to 5.7x net debt/ EBITDA with an INR64b YoY

increase witnessed in net debt to INR629b (USD8.4b), a key concern. We estimate

net debt to rise further to INR676b in FY22 on weak profitability and capex plans.

However, the debt maturity profile is comfortable, with 63% of long-term debt due

for repayment after FY22. While INR139b of long-term debt (23% of the total) is due

for repayment in FY21, we believe it should be comfortably managed with

refinancing as well as cash and cash equivalents in hand of INR120b as of Mar’20.

Consolidated RoE and ROCE fell sharply in FY20 to 6.1% (-18.3pp) and 4.5% (-6.5pp),

respectively, weighed by weak domestic demand and significant losses in overseas

subsidiaries. These would be subdued even in FY21 due to the COVID-19 impact.

We expect consolidated Revenue/ EBITDA/ PAT at INR672b/ 112b/ 20b, -7%/+1%/-

9% YoY respectively. However, with an expectation of better demand in FY22 and

commissioning of the 5mtpa Dolvi expansion, we expect Revenue/ EBITDA/ PAT to

improve substantially by 30%/ 59%/ 165% YoY to INR875b/ 178b/ 52b respectively.



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

Stock Info

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

Free float (%)

JSTL IN

2,417

499.8 / 6.5

297 / 133

-3/-13/-18

2128

57.3



Financials Snapshot (INR b)

Y/E Mar

Sales

EBITDA

AdjEPS (INR)

EPS Gr. (%)

BV/Sh. (INR)

RoE (%)

RoCE (%)

Payout (%)

Valuation

P/E (x)

P/BV (x)

EV/EBITDA (x)

Div. Yield (%)

2020 2021E 2022E

726.1 672.1 875.1

111.6 112.1 178.2

21.7

19.7

52.2

9.0

8.2

21.8

-71.6

-9.2 165.2

152.5 158.6 178.3

6.1

5.3

12.9

4.5

4.1

7.3

28.9

29.1

10.9

22.9

1.4

10.2

2.0

25.2

1.3

10.4

1.0

9.5

1.2

6.6

1.0



Higher exports to combat weak domestic demand, but dilute margins



Shareholding pattern (%)

As On

Promoter

DII

FII

Others

In FY20, JSTL ramped-up exports by 33% YoY to 3.2mt amid 10.7% YoY decline

in domestic volumes (due to weak demand from auto and other flat steel

consumers). Share of exports rose to 21% of sales (v/s ~16% in FY19).

JSTL expects share of exports to rise further to ~30% in FY21 as domestic

demand is likely to be weak due to the disruption caused by COVID-19.

Higher exports would, however, result in a weaker blended per ton realization

and EBITDA margin in FY21. We estimate EBITDA to decline 3% YoY in FY21.

JSTL’s announced capex plans of INR487b over FY18–22 are just halfway

through in FY20, with capex of INR239b spent thus far.

Amid uncertainties arising from COVID-19, JSTL is focusing on cash

conservation and has thus recalibrated its capex plans to prioritize return-

accretive projects. FY21 capex has thus been curtailed to INR90b v/s the earlier

planned spend of INR163b.

The total capex plan of INR487b is thus likely to spill over to FY23 and beyond.

Mar-20 Dec-19 Mar-19

42.7

42.3

42.7

4.9

4.6

3.4

17.7

18.3

19.2

34.7

34.8

34.7

Capex curtailed as focus on cash conservation



FII Includes depository receipts



Amit Murarka - Research analyst

(Amit.Murarka@motilaloswal.com)

Basant Joshi - Research analyst

(Basant.Joshi@motilaloswal.com)

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

JSW Steel

Stock Performance (1-year)

Net debt increases by INR64b in FY20; net debt / EBITDA rises to 5.7x



Net debt (including acceptances) increased by INR64b YoY to INR639b in FY20

on weak domestic margins, significant losses in subsidiaries, and a higher capex

spend. However, gross debt surged by INR121b to INR759b as JSTL increased

liquidity in hand due to uncertainty in cash flows stemming from COVID-19.

Net debt / EBITDA rose to 5.7x in FY20 (from 3.0x in FY19) and would remain

elevated at 5.9x in FY21, weighed by the expectation of weak profitability.

JSTL is exposed to currency risk on its debt, with 48% of debt being USD-

denominated, 47% INR, and the balance 5% other currencies.

Average cost of debt stood at 6.7% in FY20, but MTM loss on forex debt (at

INR24b) implies additional cost of 3.3%, taking the total cost to 10%.

In FY21, debt of INR139b (USD1.8b) is lined up for repayment. However, we

expect it to be managed comfortably through refinancing and JSTL’s strong cash

and cash equivalents position of INR120b.

The debt maturity profile (excl. working capital borrowings) is forecast as

follows: FY21 – 23% (INR139b), FY22 – 14% (INR88b), FY23 – 21% (INR127b), and

post-FY23 – 43% (INR263b).

EBITDA to OCF conversion improves, but FCF remains negative



JSTL’s FY20 operating cash flow (OCF) declined by INR18.5b YoY to INR128b,

dragged down by weaker EBITDA of INR112b (down 41% YoY). This was partly

offset by the release of working capital of INR16b (v/s an increase of INR16b in

FY19) and lower income tax payments.

The cash conversion ratio (OCF post working capital / EBITDA) improved to 1.2x

(v/s 0.9x in FY19), driven by working capital release in FY20.

While OCF was weaker, cash capex came in higher at INR128b in FY20 (up

INR26b YoY), resulting in negative free cash flow (FCF) of INR41.1b (post interest

payments and acquisition spends) v/s negative INR6.6b in FY19.

Overseas subsidiaries continue to incur losses, require parent support



JSTL’s overseas subsidiaries widened their losses in FY20. Key overseas

subsidiaries – JSW (USA) Inc, JSW (USA) Ohio Inc, and JSW Italy Plombino S.p.A –

reported combined EBITDA loss of INR12.4b v/s loss of INR2.8b in FY19.

JSTL extended loans of ~INR12.0b to Periama Holdings, LLC – holding company

of JSW (USA) Inc and West Virginia coal operations – in FY20, taking the total

receivables from the same to INR61.3b.

JSTL is implementing measures to turnaround its overseas operations. In the US,

the integration of Ohio and Baytown (Plate Mill) operations is planned to derive

synergies. The Plate Mill at Baytown is also being modernized, which is likely to

provide cost savings in FY21.

Other key points from Annual Report



Bhushan Power acquisition further delayed due to legal issues:

The erstwhile

promoters of Bhushan Power and Steel (BPSL) and certain operational creditors

have filed an Appeal before the Supreme Court against the NCLAT order

declaring JSTL the winner of the bid process to acquire BPSL. If JSTL is upheld as

the winner, this would result in a further increase in debt by at least INR30b.

18 July 2020

JSW Steel



This calculation is based on the INR197b deal value, 70% debt funding, and JSTL

taking 51% stake in the asset, with the balance being sold to strategic investors.

24km pipe conveyor operationalized at Vijayanagar:

JSTL operationalized a

24km pipe conveyor with a capacity of 10mtpa in FY20 (likely to be enhanced to

20mtpa). Furthermore, it transported ~3.4mt of iron ore during the year,

generating savings of INR560m (INR165/t of iron ore); the full potential of these

developments is likely to be achieved in FY21.

Captive iron ore production adding to fixed cost:

JSTL mined 4.1mt of iron ore

from its captive mines in Karnataka. It paid statutory dues (premium and

royalty) of INR6.5b on the same in FY20, implying cost of INR1,588/t. Production

in Karnataka is guided to rise to 7mt in FY21.

Shift to new tax regime unlikely in near future:

In its standalone operations,

JSTL has minimum alternate tax (MAT) credit entitlement of INR42b, which it

expects to utilize over the next six years. The company thus does not plan to

shift to the new tax regime of 25% over this period as it would have to forego

the MAT credit.

In FY20, employee cost rose by 6% YoY to INR15.0b on a 4% increase in

employee count to 13,159 and 4% in per employee cost, partly offset by 34%

decline in managerial remuneration to INR570m.

Valuation and view



We like JSTL given its strong pipeline of projects and cost reduction initiatives.

On the domestic front, while on the one hand, it should deliver above-industry

volume growth in FY22, driven by expansion, margins should also improve,

aided by a better product mix. Any turnaround in its loss-making overseas

operations could provide a further upside.

In the near term, we expect JSTL to tide over the disruption caused by COVID-

19, supported by higher exports, cost reductions, and capex curtailment.

Although net debt is expected to rise to INR676b in FY22E (from INR639b in

FY20), we expect it to decline subsequently as the capex phase ends and

invested projects start to generate cash flows. We value JSTL at 7.0x FY22E

EV/EBITDA to arrive at TP of INR242/share. Maintain

Buy.

Exhibit 1: Target price calculation

Y/E March

A. S/A volumes

B. EBITDA per ton

C. S/A EBITDA (AxB)

D. Sub. EBITDA

E. Cons. EBITDA (C+D)

F. Target EV/EBITDA (x)

G. Target EV (FxG)

less: Net Debt (Rs m)

Add: Non-current investments (at Book value)

Equity value

No. of shares

Equity value /sh.

2020

15.1

7,824

1,17,990

-6,420

1,11,570

2021E

14.4

7,949

1,14,478

-2,328

1,12,150

2022E

18.0

9,441

1,69,946

8,300

1,78,246

7.0

12,47,720

6,76,029

9,740

5,81,430

2,400

242

Source: MOFSL

6,39,300

6,64,609

18 July 2020

JSW Steel

Higher exports to support volumes, but dilute margins

Share of exports rises in FY20; should grow further in FY21

In FY20, JSTL’s standalone sales volumes declined 4% YoY to 15.1mt. Domestic sales

fell 10.7% YoY to 11.9mt, primarily due to demand contraction for flat steel (led by

slowdown in auto demand). As a result, JSTL’s share of domestic volumes decreased

to 11.9% from 13.5% in FY19. Weak domestic demand for flats resulted in JSTL

growing its exports to 3.2mt (up 33% YoY). Exports contributed ~21% to volumes in

FY20 (v/s 16% in FY19); JSTL has the flexibility to export in times of weak domestic

demand, backed by the strategic location of its Dolvi plant.

We expect the share of exports to rise to ~30% in FY21 as domestic demand is likely

to be even weaker during the year, resulting in ~5% YoY decline in total sales

volumes. However, we expect volume growth to be strong at 25% YoY in FY22,

driven by increased capacity post the Dolvi expansion in 4QFY21.

Exhibit 2: Domestic volumes decline in FY20 on weak demand

Domestic Sales (mt)

33.7

28.1

6.6

6.1

0.9

5.2

13.6

7.8 8.9

1.9

1.4

6.4

7.0

11.9

2.4

9.5

Export Sales (mt)

14.8

21.8

12.1

1.5

3.8

0.8

10.7

Total Sales (mt)

15.6

3.7

5.7

15.8

2.4

0.9

13.3

15.1

3.2

Growth (%)

18.0

14.4

4.3

4.5

25.0

12.0

3.1

1.4

8.9

-4.3 -4.5

11.9

10.1

13.5

11.0

12.0

Source: Company, MOFSL

Exhibit 3: JSTL’s share in domestic steel consumption declines to 11.9% in FY20

JSW Domestic Sales (mt)

12.8

7.8

9.0

9.5

11.6

13.1

JSW Domestic share (%)

13.1

13.2

13.5

11.9

5.2

6.4

7.0

9.5

8.9

10.7

11.0

12.0

13.3

11.9

Source: Company, MOFSL

Lower prices result in 33% decline in EBITDA/t in FY20

In FY20, realization declined 14% YoY to INR42,139/t on weak pricing in the

domestic market and a higher share of exports. As a result, EBITDA/t was down 33%

YoY to INR7,824/t. We expect 8% YoY decline in blended realization in FY21 on the

expectation of lower domestic prices and an increase in the share of exports to 30%

(from 21% in FY20). However, cost benefits from lower iron ore / coking coal prices

and cost reduction measures should result in nearly flat YoY EBITDA/t in FY21 (32%

lower than FY19).

18 July 2020

JSW Steel

Exhibit 4: Export realization at sharp discount to domestic

Blended Realisation

45,841

36,855

31,442

30,379

18,991

35,379

28,741

41,509

31,135

32,431

50,198

48,783

42,139

31,454

Domestic

43,956

Exports

41,757

38,900

29,567

43,414

7,868

40,900

30,159

4,736

123

147

190

112

178

Exhibit 5: Standalone EBITDA/t declines 33% in FY20

Conso EBITDA (INR b)

11,676

8,728

7,824

7,949

9,441

Standalone EBITDA/t (INR)

Source: Company, MOFSL

Employee cost to be flat led by sharp decline in managerial remuneration

JSTL is planning targeted cost savings, supported by technology and digitalization, to

reduce the cost base across areas of operation. Employee costs have already been

cut, with FY21 likely to see flat manpower costs despite the new capacity at Dolvi.

FY20 has already seen remuneration for managerial personnel being cut by 36% due

to decline in profit-linked commissions payable to them.

Exhibit 6: Managerial remuneration declines 36% YoY, staff cost likely to be controlled in FY21

INR m

No. of permanent employees at end

Staff cost

Managerial remuneration

Staff cost excl. managerial remumeration

Staff cost per employee

FY17

11848

11,676

340

11,336

0.96

FY18

11619

12,600

926

11,674

1.00

FY19

12599

14,160

870

13,290

1.05

FY20

13159

14,960

570

14,390

1.09

Source: Company, MOFSL

Captive mining to increase in FY21, merchant iron ore sourcing to reduce

JSTL produced 4.1mt of iron from its captive mines in Karnataka, which contributed

~20% to the iron ore requirement in FY20. With three more mines in Karnataka

being operationalized in FY21, the company expects to produce 7.0mt iron from the

Karnataka mines.

JSTL won four mines in Odisha iron ore auctions in FY20; the company has iron ore

reserves of 1.16b tonnes and environmental clearance to produce 29mt. The said

mines were won at a premium of 106%. JSTL commenced mining operations from 1

Jul’20. Average production for FY19 and FY20 from these mines stood at 21.65mt.

The company would have to produce ~80% of the last two years’ average

production in FY21/FY22 to comply with the conditions of the auction.

While it may be uneconomical for JSTL to use Odisha ore in Karnataka due to the

higher freight cost involved, it would look to replace the merchant ore procured at

JSTL Dolvi with captive ore. Dolvi procured 3.4mt of high-grade ore from

Chhattisgarh in FY20 for pellet making. JSTL may have to sell a part of its production

in Odisha on the merchant market to comply with auction conditions.

Moreover, with the premium being high at 106% of Indian Bureau of Mining (IBM)

prices, we believe captive mines are likely to result in iron ore cost of INR300–400/t

(mining cost) until the time that JSTL sets up evacuation facilities in the form of

slurry pipelines or conveyors, thereby reducing freight cost.

18 July 2020

JSW Steel

Exhibit 7: JSTL wins iron ore mines with 1.16b tonne reserves at 106% premium; has EC to produce 29.3mt

Name of the block

Nuagaon

Narayanposhi

Ganua

Jajang

Total

Resources in

MnT

793

191

119

1,161

EC Capacity

MnT

5.6

6.0

1.2

16.5

29.3

Production in

2018-19 MnT

5.6

3.0

0.3

11.7

20.6

Reservation

Merchant

Captive

Merchant

Premium

95%

99%

132%

110%

106%

Source: Steelmint, MOFSL

18 July 2020

JSW Steel

Capex curtailed as focus on cash conservation

Capex calibrated to prioritize return-accretive projects in FY21

JSTL currently implenting an announced mega capex plan of INR487b in FY18–22. Of

this, over FY18-20, INR239b (49%) has already been spent. Upstream projects

include capacity expansion at Dolvi by 5mtpa to 10mtpa (including a captive power

plant and coke oven plant) and at Vijaynagar by 1mtpa to 13mtpa. Downstream

projects focus is on product or mix enhancement.

Due to the weak outlook for operating profits in FY21 on account of COVID-19, JSTL

has recalibrated capex for FY21 to INR90b (vs earlier plan of INR163b) by prioritizing

capex that is return-accretive and nearing completion. It plans to spend INR82b on

enahncing steel capacities and INR8b on operationalizing seven new iron ore mines

won in auctions (three in Karnataka and four in Odisha). As a result, the balance

capex of INR158b at FY21-end (out of the total program of INR487b) is now

expected to spillover beyond FY22.

In FY21, JSTL plans to commission the following projects:

1) Dolvi – 5mtpa expansion by 4QFY21,

2) Vijayanagar – 8mtpa pellet plant and wire rod mill by 3QFY21, and

3) Downstream modernization and capacity enhancement projects at Vasind and

Tarapur, and the color coating plant at Kalmeshwar in 2HFY21.

Exhibit 8: JSTL’s capex program outlay

Capex plan

A. Announced Capex plan over FY18-22

B. Capex spent till FY19

C. Capex spend in FY20

D. Capex spent till FY20 (B+C)

E. Capex plan for FY21

F. Capex to be spent over FY22-FY23 (A-D-E)

INR b

487.2

137.3

102.0

239.3

90.0

157.9

Source: Company

18 July 2020

JSW Steel

Exhibit 9: Ongoing project pipeline

Ongoing Projects

A. Up-Stream Projects

Vijaynagar expansion from 12mtpa to 13mtpa

BF Upgradation from 3 to 4.5mtpa

Billet Caster

Wire-rod Mill

Dolvi - Capacity expansion from 5mtpa to 10mtpa

Blast furnace

Steel Melting Shop

Hot Strip Mill

Pellet Plant

4 x 600 TPDs of LCPs

B. Product mix enhancement projects

Vijaynagar - CRM complex expansion from 0.85 to 1.85mtpa

Continuous pickling line for auto (HRPO products)

Construction grade galvanized products

Color coated products

Vasind/Tarapur

GI/GL capacity

Color coated capacity

Ner Capacity or modernisation-cum-capacity

Color coating line at Vijaynagar

Pre-Painted Galvalume line at Kalmeshwar

Tinplate capacity at Tarapur

Continuous annealing line in Vasind

Color coated line at Rajpura

C. Cost reduction and integration projects

Vijaynagar

Pellet plant

Coke oven

Dolvi

coke oven

Power plant (WHRS)

Captive Power plant

Capacity (mtpa)

Time-line

Not defined

1.5

1.4

1.2

4.5

5.0

Capex (INR b)

23.0

FY21 end

150.0

20.0

1.2

0.9

0.3

0.9

0.3

0.30

0.22

0.25

0.50

0.25

1QFY20

3QFY21

2HFY21

not defined

2HFY21

not defined

17.3

9.4

7.0

2.0

8.0

1.5

175

2HFY21

52.0

20.5

9.8

Source: Company

18 July 2020

JSW Steel

Leverage to stay elevated in the near term

Net debt increases by INR64b in FY20; net debt / EBITDA rises to 5.7x



Net debt (including acceptances) increased by INR64b YoY to INR639b (USD8.5b)

in FY20 on weak domestic margins, significant losses in subsidiaries, and higher

capex spend. Gross debt surged even more by INR121b to INR759b (USD10.1b)

as JSTL increased liquidity in hand due to the uncertainty surrounding cash flows

stemming from COVID-19.

The outstanding balance of the advance received from Duferco stands at

INR40.0b at FY20-end. This advance, along with interest charged on the same,

will be settled through the sale of steel over the next four years.

Net debt / EBITDA rose to 5.7x in FY20 (from 3.0x in FY19) and should remain

elevated at 5.9x in FY21, due to likely weak cash flow generation in FY21.

Net debt/ EBITDA is expected to decline to 3.8x in FY22 as JSTL overcomes the

adverse impact of COVID-19 on margins and new capacities gets commissioned.

If JSTL is upheld as the winner of Bhushan Power and Steel (BPSL), this would

result in a further increase in debt by at least INR30b or ~5%. This calculation is

based on the INR197b deal value, 70% debt funding, and JSTL taking 51% stake

in the asset, with the balance being sold to strategic investors.

JSTL is exposed to currency risks on its debt, with 48% of debt being USD-

denominated, 47% INR, and the balance 5% other currencies.

Average cost of debt stood at 6.7% in FY20, but MTM loss on forex debt (at

INR24b) implies an additional cost of 3.3%, taking the total cost to 10%.

Exhibit 11: Net debt to equity is however stable

Net-Debt to Equity

2.7

5.7

5.9

3.8

2.1

2.3

1.7

1.6

Exhibit 10: Leverage to remain elevated in FY21

Net Debt (INR b)

8.3

5.1

Net debt/EBITDA

4.3

3.3

3.0

Source: Company, MOFSL

18 July 2020

JSW Steel

Exhibit 12: FY20 consolidated net debt increases by INR64b, but higher liquidity in hand raises gross debt by INR121b

INR m

Bonds

Debentures

Term Loan (Unsecured)

Term Loan (Secured)

Deferred government loans (unsecured)

Preference Shares (unsecured)

Acceptances for Capital Projects

Finance lease obligations

Unamortised fees on upfront borrowings

Advances from Duferco (incl. current year portion)

A. Long-term borrowings

Short-term borrowings

Capital acceptances (maturing in 1 year)

Trade payables Acceptances

B. Short-term borrowings

C. Gross Debt (A+B)

D. Cash and Cash Equivalents

E. Net-Debt (C-D)

Change

FY17

32,420

63,510

88,010

1,74,980

1,030

7,350

1,690

19,810

-2,580

3,86,220

48,810

10,150

95,020

1,53,980

5,40,200

17,850

5,22,350

FY18

65,040

47,040

80,450

1,57,200

990

5,910

5,040

17,810

-2,270

3,77,210

21,770

7,160

90,330

1,19,260

4,96,470

13,750

4,82,720

-39,630

FY19

69,180

41,410

1,26,950

1,52,340

1,210

2,510

19,570

-2,540

48,420

4,59,050

63,330

13,320

1,02,280

1,78,930

6,37,980

62,690

5,75,290

92,570

FY20

1,05,540

53,000

1,71,370

1,63,230

1,670

240

19,060

-3,630

40,540

5,51,020

83,250

27,100

97,980

2,08,330

7,59,350

1,20,050

6,39,300

64,010

Source: Company

Exhibit 13: Consolidated currency exposure of asset/ liability item;

Currency

breakup of debt of INR530b – INR 47%, USD 48%,

Euro 3%, JPY 1%

INR m

Financial assets

Investments

Loans

Trade receivables

Cash and cash equivalents

Bank balances other than cash and Cash Equivalent

Derivative assets

Other financial assets

Total financial assets

Financial liabilities

Borrowings

Trade payables

Derivative liabilities

Lease liabilities

Other financial liabilities

Total financial liabilities

INR

9,170

15,140

30,310

38,350

79,820

190

34,810

2,07,790

2,49,400

56,530

610

19,640

71,760

3,97,940

USD

8,020

690

540

2,750

280

12,280

2,56,820

1,05,420

3,190

330

48,150

4,13,910

EURO

140

6,720

620

430

7,910

18,430

16,270

530

21,510

56,740

JPY

5,330

310

2,340

7,980

Other

450

480

Total

9,760

15,140

45,050

39,660

80,370

2,940

35,540

2,28,460

5,29,980

650

1,79,180

3,810

20,500

2,310

1,46,070

2,970

8,79,540

Source: Company

Cost p.a.

5.5%

9.3%

4.1%

8.4%

8.5%

6.7%

Source: Company

Exhibit 14: JSTL’s blended cost of debt stands at 6.7%

Type of debt

Bonds

Debentures

Term loans from banks (Unsecured)

Term loans from banks (Secured)

Working capital loans

Commerical Papers

INR m

1,05,540

53,000

1,71,380

1,63,230

44,420

38,830

5,76,400

Repayment schedule manageable; 63% of debt due post FY22



Of the total long-term debts, INR139b debt is due for repayment in FY21. Of

this, the INR10b advance from Duferco would be settled through the sale of

18 July 2020

JSW Steel



steel. The balance portion of INR129b is well-covered, with a cash balance of

INR120b reported at FY20-end. However, owing to planned capex of INR90b in

FY21, we expect JSTL to refinance a part of its debt obligation.

The debt maturity profile (excl. working capital borrowings) is forecast as

follows: FY21 – 23% (INR139b), FY22 – 14% (INR88b), FY23 – 21% (INR127b) and

post-FY23 – 43% (INR263b).

Exhibit 15: Debt repayment schedule – 63% of long term debt repayments only after FY22

Debt maturity profile

Long-term Debt maturities

Advance from Duferco (tentative)

Acceptances for capital projects

Commercial papers

Total

FY21

63,725

10,100

27,100

38,330

1,39,255

FY22

77,889

10,100

FY23

1,16,490

10,100

FY24 and

onwards

2,45,526

10,240

87,989

1,26,590

2,55,766

Source: Company

Exhibit 16: JSTL’s liquidity exposure

INR m

Financial liabilities

Long-term borrowings

Short-term borrowings

Trade payables

Derivative liabilities

Lease liabilities

Other financial liabilities

Total

<1 year

83,250

1,79,180

2,510

3,060

1,41,430

4,09,430

1-5 year

3,49,900

1,300

11,620

4,570

3,67,390

> 5 years

96,830

5,820

1,02,720

Total

4,46,730

83,250

1,79,180

3,810

20,500

1,46,070

8,79,540

Source: Company

Contingent liabilities increase by INR8.2b in FY20

JSTL’s consolidated contingent liabilities increased by INR8.2b to INR56.8b in FY20.

Contingent liabilities related to tax payments to the exchequer stood at INR35.1b

(62% of the total). Contingent liabilities as a percentage of networth stood at 15.5%

in FY20 v/s 14.0% in FY19. JSTL sees the remote possibility of materialization of the

Karnataka government’s claims related to the Forest Development Tax amounting to

INR25.8b. However, it has paid INR9.2b under protest in previous years.

Exhibit 17: Contingent liabilities (consolidated) – INR m

Particulars

Guarantees

Disputed claims/levies (excluding interest, if any), in respect of:

Excise duty

Custom-duty

Income tax

Sales tax / Special entry tax

Service tax

Miscellaneous

Levies by local authorities

Levies relating to Energy / Power Obligations

Claim by suppliers and other parties

Claims related to Forest Development Tax / Fee (net of INR9.2b paid under protest)

Total

As % of Networth

FY19

470

FY20

820

4,630 4,910

7,410 7,740

210

320

13,340 15,090

6,590 7,020

530

540

2,080 2,770

900

980

12,400 16,660

48,650 56,850

14.0% 15.5%

Source: Company, MOFSL

18 July 2020

JSW Steel

Free cash flow remains weak on high capex

FCF turns negative in FY20 on lower OCF and increased capex

Despite JSTL’s EBITDA declining by INR78b to INR112b in FY20, OCF declined by just

INR18.5b due to the release of working capital and lower income tax payments. As a

result, the EBITDA to OCF conversion ratio improved to 1.2x v/s 0.9x in FY19.

However, an increase in cash capex by INR26b YoY to INR128b in FY20 resulted in

FCF turning negative in FY20. FY20 FCF stood at negative INR0.25b v/s INR44.2b in

FY19. FCF post interest and acquisitions stood at negative INR41.1b v/s negative

INR6.6b in FY19.

Over the last three years (FY17–20), JSTL has reported cumulative EBITDA of

INR571b and OCF of INR477b. However, a change in working capital includes the

receipt of advance of INR48b from Duferco in FY19. Adj. for this, OCF in FY17-20

would stand at INR429b. Over FY18–20, cumulative net interest payments stood at

INR147b, leaving INR282b at the company’s disposal for capital expenditure,

acquisitions, and dividend payments. During FY18–20, the company incurred

INR322b toward capex and INR18b toward acquisitions, resulting in negative FCF of

INR58b. The company distributed INR28b as dividends during this period, leading to

cash outflow of INR86b, funded through an increase in debt over FY18–20. During

FY17–20, JSTL’s net debt rose by INR117b; however, a part of this increase (INR34b)

was on account of adverse forex movement.

Exhibit 18: JSTL’s FCF turns negative in FY20; capex and interest funded by OCF over FY18–20

INR m

EBITDA

Change in WC

Tax paid

Other Adj.

OCF

Capex

Free Cashflow

Acquisitions/investment in subsidiaries/JVs

Interest cost net of dividend and interest income

Free Cashflow post interest

FY17

1,22,598

-38,690

-2,370

-2,658

78,880

-44,350

34,530

-1,470

-34,510

-1,450

FY18

1,46,860

-11,010

-14,400

2,340

1,23,790

-47,360

76,430

-3,610

-33,850

38,970

FY19

1,89,520

-15,810

-26,300

-1,080

1,46,330

-1,02,060

44,270

-14,270

-36,570

-6,570

FY20

1,11,570

16,390

-11,550

11,440

1,27,850

-1,28,100

-250

1,000

-41,840

-41,090

Cumulative

(FY18-20)

4,47,950

-10,430

-52,250

12,700

3,97,970

-2,77,520

1,20,450

-16,880

-1,12,260

-8,690

Source: Company

Exhibit 19: Capex funded through a mix of internal accruals and fresh debt

Capex funding through profits

Capex

71%

55%

45%

-41

-86%

Source: Company, MOFSL

Change in net-debt (net of forex)

Change in net-debt/Capex

82%

128

31%

18 July 2020

JSW Steel

Exhibit 20: Cash conversion ratio improved to 1.2x

EBITDA (INR b)

1.1

0.8

0.9

0.7

0.9

16%

14%

16%

Post WC OCF (INR b)

OCF/EBITDA

1.2

Exhibit 21: OCF / Net debt weakens to 22%

OCF (post WC)/Net-Debt

29%

FCF/Net-Debt

30%

22%

94 77

61 69

123 81

147 138

190 173

112 139

Source: Company, MOFSL

Working capital declines in FY20 on increase in payables

JSTL’s working capital declined by INR55b to INR102b in FY20. This was due to

decline in inventory and receivables and an increase in trade payables (excl.

acceptances). Lower steel prices as well as a decline in share of domestic sales in

FY20 led to a reduction in receivables which fell by 8 days to 23 days of sales.

Meanshile, payables increased by 15 days to 41 days of sales partly offset by

increase in inventory by 7 days to 70 days of sales. As a result, net working capital

days reduced by 16 days to 52 days of sales.

Exhibit 22: Working capital declines in FY20, led by lower receivables and increase in payables

INR m

Inventories

Trade receivables

Trade payables (excl. acceptances)

Net Working Capital (NWC)

Trade payables acceptances (suppliers/buyers' credit)

NWC net of acceptances

FY17

1,13,950

41,490

38,460

1,16,980

95,020

21,960

FY18

1,25,940

47,040

69,110

1,03,870

90,330

13,540

FY19

1,45,480

71,600

59,310

1,57,770

1,02,280

55,490

FY20

1,38,640

45,050

81,200

1,02,490

97,980

4,510

Source: Company

Exhibit 23: Working capital days improve by 16 days to 52 days

Working Capital Days

Inventories

Trade receivables

Trade payables (excl. acceptances)

Net Working Capital

Trade payables acceptances (suppliers/buyers' credit)

NWC net of acceptances

FY17

FY18

FY19

FY20

Source: Company, MOFSL

18 July 2020

JSW Steel

Overseas subsidiaries widen losses

Indian subsidiaries continue strong performance

JSTL’s key Indian subsidiaries performed well even in FY20 led by strong performace

by JSW Coated whose EBITDA rose 40% YoY YoY to INR5.5b. Amba River Coke

however reported 11% YoY decline in EBITDA to INR3.88b. Both the subsidiaries

though reported an increase in PAT due to lower tax rates.

Overseas subsidiaries remain a drag, requiring parent support

JSTL’s overseas subsidiaries remained a drag on consolidated earnings and widened

their losses in FY20. JSW (USA) Inc’s EBITDA turned negative in FY20 with a loss of

INR2.14b v/s postive EBITDA of INR1.9b in FY19. JSW (USA) Ohio Inc reported

EBITDA loss of INR7.9b v/s loss of INR2.9b last year. JSW Italy Plombino (earlier

referred to as Aferpi) reported EBITDA loss of INR2.3b v/s loss of INR1.7b last year.

Combined post tax losses of the three overseas subsidiaries widened in FY20 to

INR22.4b, eroding 44% of the standalone PAT. The comprable loss in FY19 stood at

INR8.3b, eroding 10% of the standalone PAT.

Exhibit 24: Subsidiaries and JVs’ performances (INR m) – Overseas subsidiaries’ losses increase in FY20

JSW (USA) Ohio JSW Italy Plombino Monnet Ispat &

Inc

S.p.A

Energy Ltd

Manufacturing Manufacturing

Produces &

Producer of

Sale of coated Sale of coke and

plates, pipes and of slabs and hot distributes special

Steel (Joint

products

pellets

double jointing

rolled coils

long steel products

Venture)

8,001

9,319

60,535

2,468

1,750

19,600

9,280

-67,132

-17,505

-1,763

27,600

18,599

-6,597

-15,037

-13

Amba River Coke

JSW (USA) Inc

5,500

2,960

3,930

800

3,880

1,940

4,340

1,760

-2,140

-8,619

1,900

-3,630

-7,900

-10,100

-2,940

-3,230

-2,360

-3,640

-1,730

-1,390

-450

-4,920

-150

-2,820

JSW Coated

Products

Nature of business

Share Capital

Reserves and Surplus

Net Worth

FY20

EBITDA/(loss)

PAT/(loss)

FY19

EBITDA/(loss)

PAT/(loss)

Source: Company, MOFSL

Parent supports overseas subsidiaries through loans and advances

JSTL extended loans of ~INR12.0b to Periama Holdings, LLC in FY20, taking the total

receivables from the entity to INR61.3b. Periama Holdings LLC is the parent

company of JSW (USA) Inc. and the West Virginia coal mines. JSTL also extended

loans of INR7.1b to Acero Junction Holdings (JSW USA Ohio) in FY20. Overall, the

balance of loans and advances to subsidiaries stood at INR89.8b in FY20 (v/s

INR79.8b in FY19). JSTL had interest receivables of INR7.9b from overseas

subsidiaries at FY20-end.

Against the loans and advances given to overseas subsidiaries and interest

accumulated thereon, JSTL has thus far provided for INR16.0b as doubtful in its

books of accounts (of which INR9.2 was provided for in FY20).

18 July 2020

JSW Steel

Exhibit 25: Loans and advances to subsidiaries by JSTL

INR m

Periama Holdings, LLC (holding co. of JSW (USA) and West Virginia)

JSW (Netherlands) B.V.

Acero Junction Holdings, Inc.

Others

Total

FY19

49,360

13,180

7990

9250

79,780

FY20

61,340

2670

15,090

10,690

89,790

Source: Company, MOFSL

Exhibit 26: Interest receivables from subsidiaries

INR m

Inversiones Eurosh Limitada (Holding Co. of Santa Fe Mining in Chile)

Periama Holdings, LLC

Acero Junction Holdings, Inc.

Others

Total

FY19

1,920

3,960

190

290

6,360

FY20

2,090

4,310

1,160

360

7,920

Source: Company, MOFSL

Exhibit 27: Provision made for unrecoverable loans and advances and interest receivable

INR m

JSTL (Netherlands) B.V.

Periama Holdings, LLC

Inversiones Eurosh Limitada

Others

Total

FY19

4,760

1,970

6,760

FY20

2,070

3,770

10,110

15,990

Source: Company, MOFSL

18 July 2020

JSW Steel

Valuation

and view



We like JSTL given its strong pipeline of projects and cost reduction initiatives.

On the domestic front, while on one hand, the company should deliver above-

industry volume growth in FY22, driven by expansion, on the other hand,

margins should also improve, aided by a better product mix. Any turnaround in

loss-making overseas operations could provide a further upside.

In the near term, we expect JSTL to tide over the disruption caused by COVID-

19, supported by higher exports, cost reductions, and capex curtailment.

Although net debt is forecast to rise to INR676b in FY22E (from INR639b in

FY20), we expect it to decline subsequently as the capex phase ends and

invested projects start to generate cash flows. We value JSTL at 7.0x FY22E

EV/EBITDA to arrive at TP of INR242/share. Maintain

Buy.

Exhibit 28: Target price calculation

Y/E March

A. S/A volumes

B. EBITDA per ton

C. S/A EBITDA (AxB)

D. Sub. EBITDA

E. Cons. EBITDA (C+D)

F. Target EV/EBITDA (x)

G. Target EV (FxG)

less: Net Debt (Rs m)

Add: Non-current investments (at Book value)

Equity value

No. of shares

Equity value /sh.

2020

15.1

7,824

1,17,990

-6,420

1,11,570

2021E

14.4

7,949

1,14,478

-2,328

1,12,150

2022E

18.0

9,441

1,69,946

8,300

1,78,246

7.0

12,47,720

6,76,029

9,740

5,81,430

2,400

242

Source: MOFSL

6,39,300

6,64,609

Return ratios declined in FY20, to stay weak even in FY21

In FY20, EBITDA / adj PAT declined by 41%/72% YoY to INR112b/INR22b. As a result,

returns ratios declined sharply, with RoE contracting to 6.1% (down 23.3pp) and

RoCE to 4.5% (down 6.5pp). We expect return ratios to remain depressed even in

FY21 on weak expected profitability. However, with an improved demand outlook

and higher volumes in FY22 on the back of the Dolvi expansion, we expect return

ratios to improve in FY22, albeit still at lower levels than FY19.

Exhibit 29: RoE declines 18.3pp to 6.1% in FY20

RoE (%)

22.8

17.4

12.9

8.3

0.0

6.1

5.3

5.7

2.7

24.4

7.9

9.6

Exhibit 30: RoCE declines 6.5pp to 4.5% in FY20

RoCE (%)

11.0

7.3

4.5

4.1

Source: Company, MOFSL

18 July 2020

JSW Steel

Trading at a discount to 10-year average P/BV due to weak earnings

JSTL is trading at a 1-year forward P/BV of 1.25x, which is a 10% discount to its past

10 years’ average and 25% discount to its past 5 years’ average. The discount is

largely on account of weak near term earnings outlook which is likely to result in

sub-par ROE of 5.3% in FY21 (vs last 10-year average ROE of 11%). We expect

valuations to recover gradually as we expect ROE to recover to 13% in FY22E.

On earnings based valuation, the stock however seems to be trading marginally

above its 10-year average multiples due to weak near term earnings. We note that it

is trading at a 1-year forward EV/EBITDA of 8.7x, which is a 7% premium to its past

10 years’ average of 8.1x and 4% premium to its past 5 years’ average of 8.4x. On

FY22 basis, when earnings are expected to normalize, we see the stock trading at

6.6x EV/EBITDA which offers upside.

Exhibit 31: JSTL trading at 8.7x 1-yr fwd EV/EBITDA

14.0

EV/EBITDA (x)

Max (x)

Avg (x)

Min (x)

Exhibit 32: JSTL trading at 1.3x 1-yr fwd P/B

3.0

2.5

2.0

P/B (x)

Min (x)

Avg (x)

+1SD

12.4

9.9

2.7

Max (x)

-1SD

1.8

1.4

0.9

0.6

9.0

8.1

6.3

6.0

8.7

1.5

1.0

0.5

0.0

1.3

4.0

Source: MOFSL, Bloomberg

18 July 2020

JSW Steel

Financials and valuations

Income Statement (Consolidated)

Y/E March

Net sales

Change (%)

Total Expenses

EBITDA

% of Net Sales

Depn. & Amortization

EBIT

Net Interest

Other income

PBT before EO

EO income

PBT after EO

Tax

Rate (%)

Reported PAT

Minority interests

Share of Associates

Preference dividend

Adj. PAT (after MI & Asso)

Change (%)

2016

4,18,789

-20.9

3,58,059

60,730

14.5

31,879

28,851

33,027

1,682

-2,494

-21,254

-23,748

-15,241

64.2

-8,508

950

138

279

-84

-100.5

2017

5,56,046

32.8

4,33,448

1,22,598

22.0

35,154

87,444

37,681

1,521

51,284

16,743

32.6

34,541

1,193

35,798

-42,485

2018

7,00,870

26.0

5,54,010

1,46,860

21.0

33,870

1,12,990

37,010

1,670

77,650

5,730

83,380

22,670

27.2

60,710

990

420

57,948

61.9

2019

8,47,570

20.9

6,58,050

1,89,520

22.4

40,410

1,49,110

39,170

2,040

1,11,980

36,440

32.5

75,540

1,150

-300

76,390

31.8

2020

7,26,100

-14.3

6,14,530

1,11,570

15.4

42,460

69,110

42,650

5,460

31,920

20,610

52,530

12,440

23.7

40,090

1,110

-900

21,683

-71.6

2021E

6,72,086

-7.4

5,59,936

1,12,150

16.7

45,599

66,551

42,600

5,390

29,341

9,910

33.8

19,430

1,215

-964

19,681

-9.2

(INR m)

2022E

8,75,138

30.2

6,96,892

1,78,246

20.4

52,692

1,25,554

55,200

5,444

75,797

23,850

31.5

51,948

1,215

-964

52,199

165.2

Balance Sheet

Y/E March

Share Capital

Reserves

Net Worth

Minority Interest

Total Loans

Deferred Tax Liability

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Capital WIP

Investments

Curr. Assets

Inventory

Account Receivables

Cash and Bank Balance

Others

Curr. Liability & Prov.

Account Payables

Provisions & Others

Net Current Assets

Appl. of Funds

2016

2,417

1,85,032

1,87,449

5,13,038

39,123

7,39,678

7,89,575

2,26,239

5,63,336

69,040

6,184

2,07,727

84,034

28,016

7,340

88,337

1,06,610

37,125

69,485

1,01,117

7,39,678

2017

2,400

2,24,070

2,26,470

-2,460

5,40,200

29,900

7,94,110

6,63,830

76,530

5,87,300

43,630

10,660

2,38,460

1,13,950

41,490

17,850

65,170

85,940

38,460

47,480

1,52,520

7,94,110

2018

2,410

2,77,570

2,79,980

-4,640

4,96,470

25,560

7,97,370

6,88,170

1,09,690

5,78,480

59,500

11,570

2,70,150

1,25,940

47,040

13,750

83,420

1,22,330

69,110

53,220

1,47,820

7,97,370

2019

2,400

3,45,550

3,47,950

-4,500

6,37,980

37,770

10,19,200

7,74,980

1,48,540

6,26,440

1,18,890

18,120

3,84,520

1,45,480

71,600

62,690

1,04,750

1,28,770

59,310

69,460

2,55,750

10,19,200

2020

2,400

3,63,590

3,65,990

-5,750

7,59,350

16,770

11,36,360

8,10,940

1,91,000

6,19,940

2,71,910

12,570

4,13,780

1,38,640

45,050

1,20,050

1,10,040

1,81,840

81,200

1,00,640

2,31,940

11,36,360

2021E

2,400

3,78,221

3,80,621

-5,750

7,59,350

20,812

11,55,033

8,90,940

2,36,599

6,54,341

2,81,910

12,570

3,82,346

1,35,214

42,351

94,741

1,10,040

1,76,135

75,495

1,00,640

2,06,212

11,55,033

(INR m)

2022E

2,400

4,25,369

4,27,769

-5,750

7,59,350

29,502

12,10,872

11,40,940

2,89,290

8,51,650

1,21,910

12,570

4,23,685

1,75,179

55,146

83,321

1,10,040

1,98,943

98,303

1,00,640

2,24,742

12,10,872

18 July 2020

JSW Steel

Financials and valuations

Ratios

Y/E March

Basic (INR)

EPS

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

EV/ton

Return Ratios (%)

EBITDA Margins (%)

Net Profit Margins (%)

RoE

RoCE (pre-tax)

RoIC (pre-tax)

Working Capital Ratios

Fixed Asset Turnover (x)

Asset Turnover (x)

Debtor (Days)

Inventory (Days)

Creditors(Days)

Working Capital (Days)

Leverage Ratio (x)

Current Ratio

Interest Cover Ratio

Debt/Equity

2016

(0.0)

9.7

77.5

1.1

2017

14.9

29.0

94.4

0.8

6.1

2018

24.0

39.2

116.2

2.3

11.3

8.1

5.0

1.7

1.4

6.5

1.2

946

14.5

(0.0)

2.7

3.0

0.5

0.6

1.9

0.9

2.7

22.0

6.4

17.4

7.9

8.5

0.8

0.7

2.8

2.3

21.0

8.3

22.8

9.6

10.6

1.0

0.9

2.2

3.1

1.7

2019

31.8

48.3

145.0

3.3

12.2

6.5

4.3

1.4

1.3

5.7

1.6

974

22.4

9.0

24.4

11.0

13.0

1.1

0.8

3.0

3.8

1.7

2020

9.0

34.4

152.5

4.1

55.1

22.9

6.0

1.4

1.6

10.2

2.0

1,063

15.4

3.0

6.1

4.5

6.0

0.9

0.6

2.3

1.6

1.7

2021E

8.2

27.1

158.6

2.0

24.4

25.2

7.6

1.3

1.7

10.4

1.0

1,075

16.7

2.9

5.3

4.1

6.0

0.8

0.6

2.2

1.6

1.7

2022E

21.8

43.6

178.3

2.0

9.2

9.5

4.7

1.2

1.3

6.6

1.0

869

20.4

6.0

12.9

7.3

9.6

0.8

0.7

2.1

2.3

1.6

Cash Flow Statement (Consolidated)

Y/E March

EBITDA

Non cash exp. (income)

(Inc)/Dec in Wkg. Cap.

Tax Paid

CF from Op. Activity

(Inc)/Dec in FA + CWIP

(Pur)/sale of Invest.

Acquisition in subs.

Int. & Dividend Income

Others

CF from Inv. Activity

Equity raised/(repaid)

Debt raised/(repaid)

Dividend (incl. tax)

Interest paid

CF from Fin. Activity

(Inc)/Dec in Cash

Add: opening Balance

Regrouping etc

Closing Balance

2016

60,730

2,172

6,189

-2,055

67,035

-51,787

-1

631

-51,118

3,781

-3,536

-27,997

-27,752

-11,835

19,136

7,340

2017

1,22,598

-2,658

-38,690

-2,370

78,880

-44,350

-2,940

-1,470

1,180

450

-47,130

10,750

-2,180

-35,690

-27,100

4,650

7,340

5,860

17,850

2018

1,46,860

2,340

-11,010

-14,400

1,23,790

-47,360

-3,610

1,260

600

-49,020

-270

-39,920

-6,550

-35,110

-81,850

-7,080

17,850

2,980

13,750

2019

1,89,520

-1,080

-15,810

-26,300

1,46,330

-1,02,060

2,510

-14,270

1,580

-2240

-1,14,480

-1,530

66,540

-9,330

-38,150

17,530

49,380

13,750

-440

62,690

2020

1,11,570

11,440

16,390

-11,550

1,27,850

-1,28,100

850

1,000

5,130

-74740

-1,95,860

1,10,750

-11,950

-46,970

51,890

-16,120

62,690

73,480

1,20,050

2021E

1,12,150

420

-5,868

1,06,701

-90,000

(INR m)

2022E

1,78,246

-29,951

-15,159

1,33,135

-90,000

5,390

-84,610

5,444

-84,556

-4,799

-42,600

-47,400

-25,309

1,20,050

94,741

-4,799

-55,200

-60,000

-11,421

94,741

83,321

18 July 2020

JSW Steel

NOTES

18 July 2020

JSW Steel

Explanation of Investment Rating

Investment Rating

Expected return (over 12-month)

BUY

>=15%

SELL

< - 10%

NEUTRAL

< - 10 % to 15%

UNDER REVIEW

Rating may undergo a change

NOT RATED

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within

following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.

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********************************************************************************************************************************

18 July 2020

JSW Steel

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18 July 2020