Business Bureau :
RATINGS agency ICRA on Thursday revised its outlook from ‘stable’ to ‘positive’ for the domestic steel sector, as all major listed steel companies have delivered healthy financial performance during the April-June 2021 quarter. After the outbreak of the COVID-19 pandemic in 2020, ICRA had assigned a ‘negative’ outlook on the sector expecting a record fall of 20 per cent in domestic steel demand during the financial year ended March 2021. However, it later upgraded its outlook for the sector to ‘stable’ on the back of improving demand and prices. In a statement, ICRA on Thursday said, “It has revised the steel sector’s outlook to ‘positive’ from ‘stable’ following all large listed steel companies reporting their best-ever quarterly performance in Q1 (April-June) of financial year 2022, and earnings outlook remaining healthy for remaining months of FY2022.”
Given the strong earnings growth and capital expenditure (capex) curtailments following the pandemic-related uncertainty, steelmakers started to aggressively de-leverage since the second quarter of FY2021. This trend is reflected by the industry's consolidated debt levels declining to Rs 2 lakh crore in July-end 2021, from Rs 2.6 lakh crore in July-end 2020, registering a sharp decline of over 21 per cent. The industry’s consolidated borrowings today are at their lowest levels since March 2012.