Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

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Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

High Yield Experts

Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

Credit

We view JSW Steel as “Medium Risk” on the LARA scale, given the Indian government’s continued willingness to support the domestic steel market. This neutralises the cheap exports from steel-surplus countries China, Russia, Korea and Japan. We like JSW's position in the Indian market as the largest player, and a low-cost domestic one at that. The company has benefited greatly from its timely capacity expansion in 2016, as the steel market recovered. We find the capex plan aggressive, but derive some comfort from management’s commitment to maintain leverage at the current level, and to raise equity if necessary. That said, its lack of captive iron ore and coal supplies expose JSW to supply and price volatility. The company is expanding aggressively overseas, especially in the US and Europe. We are concerned about the timing and execution risks of these acquisitions and expansions. Cross-border M&A tends to entail unexpected difficulties. Our fundamental Credit Bias remains "Stable", on account of the acquisition risk and the group's partly debt-funded, aggressive expansion plan. This may slow the pace of improvement in its operations and balance sheet. We view JSW as “Weak” on the LAGA scale. The company has a well-structured Board of Directors, with INEDs holding six of the 12 positions. We like the INEDs, who constitute a diverse group and have been on the Board for varying periods, reducing the risk of complacency and interdependence. That said, the bond indenture is weak, providing limited protection for investors. Consequently, it appears that management’s interests may be skewed towards shareholders, rather than bondholders.

   We view JSW Steel as “Medium Risk” on the LARA scale, given the Indian government’s continued willingness to support the domestic steel market. This neutralises the cheap exports from steel-surplus countries China, Russia, Korea and Japan. We like JSW's position in the Indian market as the largest player, and a low-cost domestic one at that. The company has benefited greatly from its timely capacity expansion in 2016, as the steel market recovered. We find the capex plan aggressive, but derive some comfort from management’s commitment to maintain leverage at the current level, and to raise equity if necessary. That said, its lack of captive iron ore and coal supplies expose JSW to supply and price volatility.    The company is expanding aggressively overseas, especially in the US and Europe. We are concerned about the timing and execution risks of these acquisitions and expansions. Cross-border M&A tends to entail unexpected difficulties.    Our fundamental Credit Bias remains "Stable", on account of the acquisition risk and the group's partly debt-funded, aggressive expansion plan. This may slow the pace of improvement in its operations and balance sheet.    We view JSW as “Weak” on the LAGA scale. The company has a well-structured Board of Directors, with INEDs holding six of the 12 positions. We like the INEDs, who constitute a diverse group and have been on the Board for varying periods, reducing the risk of complacency and interdependence. That said, the bond indenture is weak, providing limited protection for investors. Consequently, it appears that management’s interests may be skewed towards shareholders, rather than bondholders. 

JSW Steel - Tear Sheet - Lucror Analytics

JSW Steel Ltd

JSW Steel - Tear Sheet - Lucror Analytics