Fitch Ratings has revised JSW Steel (JSW Steel) outlook to negative from stable, while affirming the long-term issuer default rating (IDR) at 'BB+'. The agency also affirmed JSW Steel's senior unsecured rating and the rating on its USD 500 million 4.75% senior unsecured notes due 2019 at 'BB+'.

The revision in the outlook reflects the risk of further declines in pricing, which would make it difficult for the company to improve performance and reduce leverage. JSW Steel's financial profile weakened amid challenging conditions for Indian steel producers in 2015 and high debt levels as the company expands capacity.

A key assumption of Fitch's rating case is that steel prices will recover modestly in the financial year ending Mar. 31, 2017 (FY17) in response to improving steel demand in India.

The rating reflects the company's strong market position and highly efficient operations, which allow it to maintain low costs.

Fitch expects JSW Steel's financial profile to improve significantly in FY17 and FY18 with the benefits from capex driving higher sales volume and improvement in profitability. The better sales and profitability are key to maintaining the 'BB+' rating.