JSW Steel rises 5% after Bhushan deal completion
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By Rama Venkat and Sethuraman N R
BENGALURU (Reuters) - Shares of JSW Steel Ltd rose as much as 5.12% on Tuesday after the steel company completed its purchase of a rival under a bankruptcy resolution law, paving the way for it to become the country's biggest steel producer.
JSW Steel said https://bit.ly/3ryLFvj on Friday it would pay 193.50 billion rupees ($2.65 billion) to Bhushan Power and Steel's creditors.
"With the acquisition of Bhushan and the upcoming commissioning of 5 million tonnes per annum (mtpa) brownfield expansion in the June quarter, JSW's India capacity will rise to 27 mtpa, making it the largest steel company in the country," analysts at Jefferies said in a note.
"It will also have a diversified regional footprint with about 13 mtpa capacity in the south, about 10 mtpa in the west and around 4 mtpa in the east of the country."
The National Company Law Tribunal (NCLT) in Sept. 19 cleared JSW's takeover of Bhushan https://reut.rs/3u6OWDH, making way for JSW to take control of a steel asset in the eastern part of India where rival Tata Steel Ltd and Steel Authority of India Ltd have long dominated.
India introduced bankruptcy resolution rules reuters.com/article/us-india-economy-bankruptcy-idINKCN1PL04M in 2016.
Shares of Bhushan's main lenders, including State Bank of India Punjab National Bank, Canara Bank, were up more than 1% each, while ICICI Bank gained 2.1%.
"There is going to be positive impact (for banks) as they are able to recover some part of their dues and their non-performing asset value will reduce from their balance sheets," said Vishal Balabhadruni, senior research analyst at CapitalVia Global Research.
Tata Steel and JSW Steel, India's top two steelmakers, as well as British metals and industrial firm Liberty House had submitted bids.
(Reporting by Rama Venkat and Nallur Sethuraman in Bengaluru; Editing by Shailesh Kuber)
