Fitch revises outlook on Tata Steel to stable

Credit rating agency, Fitch has revised its outlook on Tata Steel and its subsidiary Tata Steel UK Holdings from negative to stable. The outlook has been revised on expectations of improvement in Tata Steel’s financial profile in the near to medium term. The agency has affirmed the long-term foreign currency issuer default rating on Tata Steel at ‘BB+’. The agency also affirmed the ‘B+’ long-term foreign currency issuer default rating on Tata Steel UK Holdings. Fitch stated that Tata Steel’s strong cash generation is expected to support the company’s deleveraging over the medium term despite debt levels likely to peak in FY 2015 as the company expands its capacity in India. The agency also added that the commissioning of the first phase of its new plant at Odisha in the fourth quarter of FY 2015 will also support stronger earnings. The first phase of the new plant is expected to add 3 million tonnes per annum (MTPA) of capacity. Tata Steel is among the top ten global producers of steel with a capacity of over 29 million tonnes (MT) and has undertaken expansion drive.