Steel Authority of India Ltd (SAIL) has received a significant credit rating upgrade from India Ratings and Research. The agency elevated SAIL's Long-Term Issuer Rating to ‘IND AA+’ with a Stable outlook, up from its previous 'IND AA' rating. Ratings for public deposits and bank loan facilities were similarly upgraded or affirmed at 'IND AA+/Stable/IND A1+'.
The upgrade primarily stems from a marked improvement in SAIL's operational performance throughout fiscal year 2026 and the first quarter of fiscal year 2027. Key factors cited by India Ratings include increased sales volumes, more efficient production costs, and enhanced raw material management. The company also demonstrated better blast furnace productivity, increased captive iron ore consumption, and an improved coke rate.
Financial Health and Debt Reduction
India Ratings highlighted a substantial improvement in SAIL's consolidated net adjusted leverage, which was driven by a reduction in net debt. This was achieved through lower working capital requirements, more effective inventory management, improved recovery of receivables, and strategic repayment of long-term debt.
SAIL's net debt decreased to Rs 35,700 crore in FY26 from Rs 41,400 crore in FY25, leading to a fall in net adjusted leverage from 3.89 times to 2.97 times. India Ratings anticipates that SAIL's leverage will remain below 3 times in FY27, supported by continued higher volumes, reduced production costs, a greater share of value-added products, and diligent working capital management.
Future Growth and Capex Plans
Looking ahead, SAIL has outlined an ambitious capital expenditure plan totaling approximately Rs 1 lakh crore between FY27 and FY31. The majority of this spending is projected for FY28-FY31, with the goal of expanding the company's capacity to 35 million tonnes by FY31-FY32. The agency notes that 55-65 percent of this planned capex is expected to be debt-funded, with the remaining portion sourced from internal accruals.
The pace of this expansion and its funding structure will be critical rating monitorables, especially given SAIL's historical tendency for project delays and spending less than announced capex.
Operational Metrics and Profitability
SAIL's sales volumes saw a healthy increase, reaching around 19.9 million tonnes in FY26, up from 17.9 million tonnes in FY25. Revenue is expected to improve further in FY27, bolstered by volume growth from debottlenecking projects and robust domestic demand. The upcoming operationalization of the Tasra mine from December 2027 and the Rowghat mine from FY28 is also set to enhance raw material availability and support higher production.
The company's profitability also saw an uptick, with EBITDA per tonne at Rs 6,030 in FY26, compared to Rs 5,948 in FY25. The EBITDA margin improved to 10.8 percent from 10.4 percent, and absolute EBITDA grew by 13 percent to approximately Rs 12,000 crore in FY26. In Q1 FY27, EBITDA per tonne further improved to Rs 9,887, with an EBITDA margin of 15.8 percent. India Ratings projects EBITDA per tonne to stabilize around Rs 8,500 and overall EBITDA margins at 12-14 percent through FY27-FY28, driven by value-added products, operating efficiencies, and cost reductions.
On Friday, the SAIL stock traded largely flat, opening at Rs 198.90 against its previous close of Rs 196, touching a high of Rs 198.90 and a low of Rs 194.30.