NMDC Steel shares rise after Crisil rating upgrade; what agency says on operating performance

NMDC Steel Ltd shares rose nearly 2 per cent in Friday's trade after Crisil Ratings upgraded its rating on the long-term bank facilities of the company to ‘Crisil A/Stable’ from ‘Crisil BBB+/Stable’. The stock gained 1.71 per cent to touch a high of Rs 40.25 apiece on the BSE. The upgrade reflected an improvement in NMDC Steel's business risk profile and financial risk profile, driven by stabilisation and ramp-up of its 3 million tonne per annum (MTPA) integrated steel plant at Nagarnar (Chhatisgarh), Crisil said.

Crisil said NMDC Steel's operating performance improved significantly in FY26, supported by higher capacity utilisation, better operating efficiency, and healthy domestic steel demand.

Capacity utilisation, it said, rose to 80 per cent in FY26, from 50 per cent in FY25, reflecting successful stabilisation of operations and resolution of initial bottlenecks.

This, along with a steady rise in realisations, has led to 60 per cent growth in operating income in fiscal 2026. Operating profit before depreciation, interest and tax (OPBDIT) also stood at around 11per cent in fiscal 2026, vis-à-vis operating losses in the previous two fiscals, supported by enhancement in product mix, including specialised grades, raw material optimisation and higher scale of operations. Operating performance is expected to remain healthy over the medium term supported by continued focus on improvement in operating efficiencies and product mix as well as healthy plant utilization levels amidst steady domestic steel demand growth.

"Financial risk profile is marked by an improvement in has also improved with improvement in operating performance. The adjusted interest coverage ratio improved to around 3.1 times during fiscal 2026 (negative during fiscal 2025), and is expected to be in the range of 3-4 times in the medium term, aided by steady operating performance, scheduled repayment of long-term debt and the absence of any major capital expenditure (capex) plans," Crisil said.

NMDC Steel's liquidity is supported by cash and equivalents of Rs 800 crore as on March 31, 2026, and average fund-based bank limit utilisation of 75 per cent during the 12 months ending April 30, 2026, CRISIL said.

The rating continued to factor in the support NSL receives as a Government of India (GoI) entity, through NMDC Ltd (NMDC; rated ‘Crisil AAA/Stable/Crisil A1+’).

Furthermore, Crisil Ratings noted that the Ministry of Steel has mandated NMDC to provide necessary support to NSL till it is divested by the government. These strengths are partially offset by the moderate debt protection metrics and susceptibility to cyclicality inherent in the steel industry, Crisil said.